Written by: Jack Bibiano – Follow me on Twitter: @LibertyDragon1 – Add me on Facebook: Juan Bibiano
“When will these socialists learn about economics?” Many are assuredly asking this very moment, as another “Fight for 15” protest emerges. There is once again another push for $15 minimum wage in several different locations. The protest was organized by the “Fight for $15,” a campaign funded by the Service Employees International Union that has been pushing to lift wages, and has been pressuring McDonald’s since 2012. The real problems come with the fact that the Union wants government to raise minimum wages instead of allow the free market to determine what wages should be.
There are many different reasons why increasing the minimum wage to $15 is a bad idea, but inflation is probably the most cited culprit. It only makes sense that when you make the cost of labor go up, that the price of products will also go up in order to cover costs. Increases in the cost of labor ultimately leaves the employer with two options for making up the difference: either an increase in the prices of the goods and services, or by firing employees who would otherwise earn less than the minimum wage due to inexperience. The costs of living, especially housing, vary greatly in America from state to state and city to city. As many proponents of the movement claim the reason for raising the minimum wage is to provide a “living wage,” why would they want the minimum wage in low-cost areas to be the same as in high-cost areas? Raising the minimum wage may put money in the pockets of working poor people, but does so at the expense of business owners, coworkers, working hours and of consumers who would pay in the form of higher prices.
California has passed a law to increase minimum wages and yet their economy is heavily lagging. Defenders of the minimum wage hike will point to the fact that California is the 5th largest economy in the world, but being the largest doesn’t necessarily mean you are performing the best. A recent study proves once just how harmful a $15 minimum wage can be. The study, conducted by the economic consulting group PFM, found that raising the minimum wage to $15/hour in Montgomery County, Maryland, would cost the county 47,000 jobs over a period of five years. That job loss is equivalent to $396.5 million in income. According to a 2017 University of Washington study, Seattle’s $13 minimum wage caused employee hours to drop by nine percent and lowered the average monthly income for low wage workers by $125.
Although there seems to be many different studies that seem to contradict each other, the basic laws of economics dictate that when the cost of labor goes up, the cost of living will increase as well. A better way of increasing pay rates would be to slash taxes/regulations and give businesses more incentives to do so naturally. As we see in so many aspects of our society, from education to healthcare, things always get worse whenever government gets involved. It ends up costing more while at the same time becoming less robust.