Both California and New York have passed minimum wage legislation that will prevent in relatively short order their citizens from working for less than fifteen dollars an hour. The New York bill will double the minimum wage. The California bill will increase the minimum wage by fifty percent. Even in a political climate growing increasing hostile to liberty such legislation stands out as an egregiously irresponsible and ignorant intrusion on freedom.
We hear a lot about “denialists” when it comes to climate change, but these enactments represent a massive denial about basic truths of economics. When a commodity—in this case labor—becomes substantially more expensive, people will buy less of it. The result of these laws will more unemployment for the least able among us.
Does anyone doubt that if newspapers, including those who editorialize in favor of such increases, were required by the government to double their subscription price that they would sell substantially fewer newspapers? Or if the government decreed that salaries of tenured professors must be go up by half, that colleges would substitute other kinds of instructional tools for tenured professors?
It is true that there is some research suggesting if the minimum wage is increased to a point still very substantially below the median wage, employment only marginally decreases. But this research has been rebutted, and even the leading researcher making this claim does not believe it justifies a minimum wage hike to fifteen dollars. And today substituting robots, like computerized kiosks, offers employers more opportunities for avoiding a higher wage bill than at the time his study was conducted.
Perhaps the supporters of these minimum wage bills do not care, if they prevent ten, perhaps hundreds, of thousands from working. Jerry Brown claims that a fifteen dollar minimum of wage is matter of “economic justice.” It thus appear just to Brown that a citizen be barred from employment, if his or her skills do not command fifteen dollars an hour. But how can this possibly be just? There is enormous social science evidence that being unemployed is a source of great unhappiness, even despair.
And a high minimum wage creates large social costs as well. It imposes a roadblock to getting low skilled individuals into the discipline of work. It impedes the assimilation of immigrants into the community, creating risks of social unrest. We see these dangers in European nations, like France, which have high minimum wages, although not as high as fifteen dollars an hour. The actions of New York and California provide yet more evidence of the slow decline of American exceptionalism.