During the second and final U.S. presidential debate, former Vice President Joe Biden stated that “we have to help our small businesses by raising the minimum wage.” Ostensibly, Biden studied economics in his basement in the dark if he thought higher labor costs support mom-and-pop shops, particularly in the aftermath of the coronavirus-induced economic collapse. But plenty of Florida voters shared Biden’s sentiment on Election Day, thinking now would be an opportune time to increase the wage floor.
Florida Goes California?
Florida became the latest state to approve a $15-per-hour minimum wage, following the path of several other states in recent years. Voters in the Sunshine State favored Amendment 2, a proposal to boost the minimum wage rate from $8.56 to $10 an hour on September 30, 2021. This would be followed by an annual increase of $1 until the state reaches $15. The minimum wage would be tied to inflation moving forward.
The campaign that pushed for $15, which was led by Orlando attorney John Morgan, claims it would support approximately 2.5 million families. But this could be hard to fathom when about 3,000 South Florida businesses have shut down due to the economic downturn.
Florida was one of the first major states to do a complete reopening and without seeing a significant spike in infections or hospitalizations, despite warnings from the “give it two weeks” doomers who thought the state would be a graveyard by now. But it could take time for small companies to come back online.
So, what are the other states to give the nod to a $15-per-hour minimum wage in the last few years? Here are just some of the jurisdictions:
- New Jersey
- New York
A higher minimum wage defied pre-pandemic economic reasoning. Does it make sense today?
Economic Principles Stay the Same
Right now, small businesses are separated into two groups: private enterprises that have shuttered their doors or mom-and-pop stores that barely survived COVID-19 and are still on the brink of ruin.
Small businesses run extremely tight margins, particularly in the food-service sector. At a time when companies will inevitably tighten their belts, it is nearly impossible that these companies will be able to afford these higher labor costs, no matter how incremental. Owners that wish to stay home and follow government mandates will perform a couple of tasks to adapt: slash workforce levels, cut shifts and reduce hours, refrain from expanding or hiring net new employees, automate operations, and ensure current staff take on the productive burden of the employees who have been terminated. In the end, as has been seen in Seattle and New York, workers who are given higher wages have seen lower total paycheck earnings.
Do the negative consequences of a higher minimum wage get expunged because the world is in a pandemic? The same principles apply, and the victims remain constant: young people, the unskilled, the uneducated, and minorities – the very group leftists claim to help with $15.
The Death of Small Business
Did COVID-19 kill small business, or was it the overreaction by power-hungry politicians? As Liberty Nation reported in the spring of 2020, smaller outfits have depended on a wide range of fiscal stimulus and relief tools to keep their doors open. But taxpayer-funded financial assistance is not perpetual. Even if it were, it would not be enough to endure the onslaught of other guaranteed elements that will crush small business: higher price inflation from the Federal Reserve’s money-printing crusade and higher taxes to pay for all this spending eventually.
Read more from Andrew Moran.