Why the ‘Fight for 15’ Could Blow Up in the Faces of the Poor

By | 2017-06-02T18:30:05+00:00 June 29, 2017|
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Nobody deserves a minimum wage. Everyone deserves a fair wage. But what’s “fair” depends on a whole host of factors, not least of which is the health of the economy.

Labor activists for several years have been clamoring for an across-the-board $15-an-hour minimum wage. “Fight for 15” has won key victories in big cities, including Los Angeles, San Francisco, Seattle and Washington, D.C. Governor Jerry Brown last year signed legislation that would raise California’s minimum wage—now $10.50 an hour—to $15 by 2022.

The chief claim for the $15 wage is that it would raise living standards for millions of workers in the retail and food-service industries. But that may not be true. The market may not be able to bear it.

For example, has the drive toward $15 really helped workers in San Francisco, where the minimum goes to $14 on Saturday? Since the city began phasing in its ordinance in 2014, locals have been shocked to discover the law of unintended consequences.

Business owners have found themselves raising prices, slashing hours, or shutting down altogether. More than 60 Bay Area restaurants have closed since September. A working paper released earlier this year by Harvard Business School researchers suggests that as higher wages are phased in, more restaurants are likely to close and fewer new ones will open.

It just makes sense. When higher labor costs meet tight profit margins, a business owner will either cut labor cuts or shut down.

Ah, but anecdotes are not data.

Read the rest at the Sacramento Bee

About the Author:

Ben Boychuk
Ben Boychuk is managing editor of American Greatness. He is a regular columnist with the Sacramento Bee, a weekly syndicated columnist with Tribune Media, and a veteran of several publications, including Investor's Business Daily and the Claremont Review of Books. He lives in California.
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3 Comments

  1. James Hendrixs June 29, 2017 at 4:44 pm

    Sixty restaurants closing in an area like San Francisco isn’t a symptom of high wages!! Restaurants fail all the time, even in great economies! In fact, that number is quite low for that time period in a large city!! One thong for certain, a great economy doesn’t translate into great wages our even a better living for most when an oligarchy has control over the political system
    !! Our political system is corrupted by an oligarchy that thinks the poor exist for their pleasure and profit!!! I surely hope they doesn’t end in another civil war, but I am not hopeful!!!

  2. Andy June 30, 2017 at 7:05 am

    Keeping the poor people poor is the key to any successful capitalism based economy. Even Adam Smith knew that!

  3. Nuther G. Mule July 3, 2017 at 12:38 pm

    There should be no expectation that a minimum-wage skilled worker understand basic economics, but those in positions to govern them probably should maintain a reasonable grasp.

    If I employ 20 full time equivalent workers at $10/hr and government mandates that I now pay $15/hr and anticipating that I don’t get double-digit improvement in revenues by paying the same workers more money for the same work, then I should expect to lay off 6 or 7 of those workers to keep my doors open. If my business requires 20 workers to stay open, then I will likely shutter it or lose my shirt and all 20 suffer the same fate. Best case, a third hit the pavement, and all 20 still qualify for some public assistance programs anyway.

    Wages are not a right and the value of work (or anything else) once set by government, loses meaning in the market. Hiking the wage might as well be a tax increase with negative net gain. Burden the work with a higher wage (same work, remember) and you get less work overall.

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