If comedians ever needed material for their sets, all they would need to do is peruse public policy proposals on Democratic candidates’ campaign websites and share their ideas in front of smart audiences. For years, they have floated some asinine pursuits, particularly in the field of economics, that would be comparable to The Three Stooges’ slapstick humor. But at least there was a rhyme and rhythm for Larry, Curly, and Moe – not so much for Democrats seeking a lifetime position in elected office at any level of government. So, what is the latest scheme emanating from the minds of idealistic leftists who think the state is the answer? None other than nonsensical intervention, applying arbitrary numbers.
Forget $15 – It’s Time for $30
One of the factors contributing to rising price inflation has been the enormous increase in labor costs. Today, there are more than 11.26 million job openings in the United States. At the same time, 4.4 million Americans quit their positions. Therefore, employers are so desperate for workers they are offering exceptional compensation, on-the-spot bonuses, and an abundance of perks and benefits. Some are even paying applicants to interview for open positions. It makes sense that average hourly wages have soared 5.6% over the last year.
Well, it is the perfect moment to add more pressure on companies and exacerbate the cost-of-living crisis, according to one hopeful. Rebecca Parson, a Democratic candidate for Washington’s 6th Congressional District, thinks a $30 minimum wage is appropriate, calling the previous “Fight for $15” initiative outdated.
“$15 minimum wage is an antiquated demand. It should be $30 per hour,” she tweeted. “1 adult supporting 1 kid needs $30 an hour across the country. Rural, urban, suburban: $30 is the floor. As you say your nightly prayers to Saint Elon while you fall asleep tonight, reflect on why you punch down on poor people instead of up at your heavenly billionaire.”
“Nobody should be poor in the richest country on Earth,” Parson added.
This is not the only item on her laundry list of policy proposals. Parson, who was endorsed by the Democratic Socialists of America (DSA) during her first run in 2020, also wants to address housing, Medicare, food for all, “and no more poverty.” She revealed she wants to emulate Rep. Cori Bush (D-MO), who slept outside in the nation’s capital to spotlight the need for affordable housing.
Indeed, Parson is not the only leftist to champion a higher minimum wage that goes beyond the pre-pandemic rhetoric of $15.
In March 2021, writing for The Intercept, Jon Schwarz suggested that the minimum wage should be $24 per hour. Former US Labor Secretary Robert Reich advocated for a $24 minimum wage, arguing that “$15 is the floor, not the ceiling, of what working people deserve.” Sen. Elizabeth Warren (D-MA) thinks the current minimum wage should be $22 an hour. A plethora of other individuals has put forward similarly high numbers, citing immense productivity, a rising cost of living, and equity. So, let’s explore these reasons.
The Economics of the Minimum Wage
American non-farm labor productivity has accelerated since hitting a record low in the first quarter of 1950. But trying to link wages to output can be challenging for two reasons. The first is that production values are not constants. The second is that a considerable portion, if not most, of US productivity is based on technology, from capital equipment to Microsoft Office. An October 2001 paper from the National Bureau of Economic Research (NBER) made this definitive point: “The strong performance of productivity growth in the second half of the 1990s was in fact attributable to accelerating technical change, not to poor measurement or to temporary factors.”
The US annual inflation rate is at a 40-year high of 8.5%. Businesses are offering higher wages and salaries to attract or retain workers. This is contributing to the inflationary pressures ubiquitous throughout the economy, whether it is finding employees to clear the backlog of meat processing or staffing the local fast-food joint to cook and serve the hamburgers. The higher wages go, the higher the costs will be for everything else. And, of course, there is the greater possibility of job loss or reduced overall earnings.
A minimum wage has been marketed as a tool to help the vulnerable and ensure companies extend some form of payment to employees without exploitation. While economics disproves this unfounded concern, the minimum wage does not serve as a benevolent panacea in the labor market. In fact, its history is odious, and its effects hurt the very people it is supposed to help, including the unskilled, the uneducated, youth, immigrants, and non-unionized workers. As legendary economist Milton Friedman opined in Capitalism and Freedom, “It’s about as clear a case as one can find of a measure the effects of which are precisely the opposite of those intended by the men of goodwill who support it.”
Abolish the Wage Floor
Labor is like any good or service in the open market. Therefore, its costs should be based on supply and demand. The minimum wage distorts labor rates in the marketplace based on arbitrary numbers established by “well-intentioned” bureaucrats and politicians. The primary issue, however, is that installing a wage floor above the natural wage rate typically leads to joblessness since companies will hire fewer workers or expand their automation practices. Put simply, unemployment grows, or employees earn smaller paychecks. To paraphrase Friedman, the left thinks it is better to be unemployed at $15 than to be employed at $13.
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