Upcoming State Minimum Wage Increases Will Outlaw Jobs for Low-Wage Workers
Americans have witnessed people picketing in support of a $15 minimum wage. It’s called “The Fight for $15.” Florida citizens will even vote on embedding a $15 minimum wage in their state constitution in the November 2020 election. A minimum wage plebiscite is pending in Idaho in 2020. If the past is any indication, the prospects for the Florida Idaho initiatives are good. Of the 27 state minimum wage votes since 1988, 25 passed. The two that were rejected, Missouri and Montana, were in 1996. For the 25 that have passed, electoral margins have almost always substantial. For information about these ballot initiatives, see ballotpedia.org.
Interestingly, Floridians first put a minimum wage in their constitution in 2004 when it was set at $6.25 and indexed to inflation each year. That’s the reason Florida’s current minimum wage is $8.46, an otherwise curious number. Florida’s 2020 amendment proposes increasing Florida’s current minimum wage to $10.00 in September, 2021, and thereafter in $1.00 increments to $15.00 in September 2026.
Idaho’s plebiscite, if enacted, will raise the current $7.25 minimum wage to $12 by 2024. Moreover, and particularly important for what follows, it will eliminate a current provision that allows people under age 20 to be paid $4.25 an hour for their first 90 days on the job.
Media accounts of the “Fight for $15” are supportive. They typically offer numerical exercises showing “inadequate” earnings of people working full time at the minimum wage. The accounts are laced with terminology such as “fair” and “living” wages, a tactic surely designed to evoke public sympathy/support for those struggling economically. It also seizes the high moral ground for supporters since it puts their opponents in the untenable position of appearing to favor “unfair” and “non-living” wages. It always helps to control the terminology used in a debate, doesn’t it?
Sympathy and terminology without knowledge can be dangerous, or as the saying goes, “the road to hell can be paved with good intentions.” Or as University of Chicago Nobel Laureate in economics George Stigler once put it: “Whether one is a . . . churchman or a heathen, it is useful to know the causes and consequences of economic phenomena.”
The Source of the Problem
Whether intended or not, increases in the minimum wage doom those whose economic value to employers is between the current minimum wage and the proposed higher minimum wage. The lower rungs of peoples’ economic ladders are cut off. They lose their jobs regardless of the intentions of their supposed supporters. Their supposed supporters are actually their enemies. They need to “help” less.
It is unfortunate when we read that the person who filed Florida’s ballot initiative said: "In life, I think that you’re supposed to do the most, for the most with the least. ... I did [the ballot initiative] in a way that would be business-friendly, and not just throw them in the deep end.” Similarly, an official in the “Idahoans for a Fair Wage” says "I think this would stimulate the economy, and our goal really is to help lift working Idahoans out of poverty. We’ve found that a lot of the people that this would really help would be people pretty much 35 and under."
In truth, the bills only makes many low-wage workers now legally unemployable. This is an odd way to “stimulate the economy.” And as noted at the outset, eliminating a sub-minimum wage for workers under 20 is a way to hurt, not help, those who are less productive workers. Just because a worker has relatively low productivity is no reason to outlaw that person's job. But that is what minimum wage increases do.
- "How Minimum Wage Laws Increase Poverty" by George Reisman
- "Outlawing Jobs: The Minimum Wage" by Murray Rothbard
- "Bernie Sanders Shows Us How a Minimum Wage Hike Hurts Workers" by Ryan McMaken