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[Order David Horowitz’s new book, America Betrayed, HERE.]
California now leads the nation in imposing dumb wage laws.
The state just raised the hourly minimum wage for fast food workers to $20.
Gov. Gavin Newsom said, “We saw the inequities. … we had a responsibility to do more.”
Unions pushed for the higher minimum, and in Democrat-run states, unions usually get what they want.
CNN announced, “Half a million California fast food workers will now earn $20 per hour!”
Gullible leftists at the Center for American Progress claim, “A higher minimum wage would boost millions of families out of poverty and further stimulate the economy.”
Yippee! It’s a happy cycle! Win-win.
But wait, if it’s win-win, why just make the minimum $20? Why not $30? Or $100?
Because government requiring higher wages is not a win-win.
Interfering with market prices always creates nasty unintended consequences.
Frederic Bastiat, in his work “That Which Is Seen, and That Which Is Not Seen,” points out that there are always seen and unseen consequences when government force impacts economic decisions. “Almost always,” he wrote, “the immediate consequence is favorable, the ultimate consequences are fatal.”
In this case, the immediate consequence is that existing workers get a raise. Great. That’s the seen. That’s what the media, unions and Center for American Progress see. But the unseen effect is bigger, and worse:
No. 1: Thousands of Californians have already lost jobs because some restaurants closed. Others lost income because their employer cut worker hours. The chain El Pollo Loco cut employees’ hours by 10%.
Pizza Hut announced that they will lay off more than a thousand delivery drivers. One, Michael Ojeda, understandably asked, “What’s the point of a raise if you don’t have a job?”
No. 2: Workers who still have jobs will lose them because now their employers have more incentive to automate. Chipotle just created a robot that makes burrito bowls. Even CNN acknowledged, “Some restaurants are replacing (fast food workers) with kiosks.”
No. 3: Prices go up.
The day Newsom signed the bill, he was asked, “Can Californians expect the prices of their McDonald’s and Starbucks to go up?”
Newsom deceitfully replied, “I’ve heard that rhetoric before. And it didn’t happen!”
Nonsense. It did happen. It always happens when government forces wage increases. In this case, Starbucks prices have increased as much as 15%. Customers will pay about $200/year more for their coffee. A chicken burrito at Chipotle will cost up to 8% more.
No. 4: Perhaps the worst unseen harm from minimum wage laws is that young and unskilled people won’t even be hired. They won’t gain valuable experience from a first job at a fast food restaurant.
In 2014, when Seattle politicians raised the minimum wage to $15 — I asked some teenagers what a higher minimum wage could do for them.
“Minimum wage actually hurts my chances of getting employed,” said one, Rigel Noble-Koza. “If I cost more, why would a company take a risk on hiring me? They’ll hire the worker with more experience instead.”
Another, Dillon Hodes, talked about his friend who had fast work but got her hours cut because “she was young and inexperienced.”
Of course, these students were unusual. They were finalists in a Stossel in the Classroom contest. They are not economically ignorant. They knew to look for the unseen.
If only politicians were that smart.
Government price fixing like minimum wage laws hurt the young and the poor, the very people these laws are supposed to help.
Rubio’s closed about 1/3 of their restaurants over the weekend.
The wage increase is pushing marginal locations over the edge.
Apparently, some people don’t understand that business don’t exist simply to pay employees.
It’s not a minimum wage it’s a STANDARD wage where everyone gets paid the same apart from the elite.
Stalin and Mao etc would be proud.
Dr. Walter E. Williams and Dr. Thomas Sowell both once wrote that the real minimum wage is zero. All other notions of the minimum wage is fantasy.
No need, really, to mandate a “minimum wage”. All that is necessary is to legislate and fund a “guaranteed monthly income”, and businesses would automatically need to pay wages higher than “guaranteed income” to get anyone to work. How stupid can we get? I’m not holding my breath. One more thing: A vote for Biden is a vote for $20.00 a loaf bread – if you can find it.
Entirely predictable, except to the foolish Dems/leftists.
There is an immutable formula for any business. Nothing and no one can violate it and survive.
iIt is cost of goods sold plus margin plus fixed cost MUST be less than selling price. Labour is part of COGS as it is one part of what it takes to make the product and put it into the customer’s hand.
Thomas Sowell wrote a University level textbook on Economics. It was a most excellent book, but cost, as all textbooks do, way too much Not under his control Some years later, in frustration, he rewrote it and published it through a non-textbook channel. It is called Basic Economics, around 600 pages, but cost me $24 fifteen years back when our professor specified that version for us. I would recommend everyone read this. But if I had the power I;d make EVERY lawmaker sit down and READ it cover to cover. In it they many of them would find examples of idiocy just like this one. Hopefully some would feel like they are looking in a mirror at their own sorry selves, and this would be a great benefit to the lot of us.