West Virginia’s Joe Manchin, the Senate symbol of responsible and reasonable, rejects Joe Biden’s proposal for a $15 federal minimum wage as something not “responsible and reasonable.” For Manchin, $11 an hour meets that description.
A question not considered on Capitol Hill: Why is a federal minimum wage — of $1 an hour, $100 an hour, and everything in between — responsible and reasonable?
A one-size-fits-all approach to a nation extending from the Atlantic to the Pacific seems a fool’s errand.
A minimum wage of $15 an hour amounts to an annual salary of $31,200. In Tennessee, Georgia, Florida, Missouri, Montana, and several other states, two breadwinners earning that place their family above the median household income line. Should the minimum wage really amount to the median wage? Should we also legislatively set a new worth of $1 bills at $10?
If enacted, the new federal law would mandate the minimum wages of all 50 states to rise. In 22 states, a $15 minimum wage would more than double the current minimum wage. Whether or not a right time for this exists, the aftermath of a sharp economic depression seems like the wrong time.
A one-size-fits-all approach to a nation extending from the Atlantic to the Pacific seems a fool’s errand. Perhaps anything less than $15 an hour makes it impossible to live in Washington, D.C., where rents for a one-bedroom apartment often exceed $2,000 a month. But in Meridian, Mississippi, where most of the three-bedroom units advertised on Craigslist come in below $1,000 a month, $15 an hour seems extravagant from the perspective of many employers, who cannot afford to pass on such costs to consumers who simply cannot afford to pay them. In other words, $22 pizzas do not sound as appealing as a $15 minimum wage.
The democracy of the market sets prices for gasoline, books, homes, and apples. Why should labor differ in this regard by deferring to the autocracy of price controls arbitrarily set by strangers not party to the economic exchange? Employer and employee retain the freedom to choose to accept or reject the offer of the other. Competition drives prices in the market. Coercion drives it in the distorted world of mandates.
For a case study in the unintended consequences of wage controls, look to Long Beach, which passed a measure mandating an extra $4 per hour for grocery store workers ostensibly because of coronavirus. Kroger just announced the April closure of two of its supermarkets, Ralphs and Food 4 Less (you can’t buy food for less when they pay for more, can you?), in the city.
“As a result of the City of Long Beach’s decision to pass an ordinance mandating Extra Pay for grocery workers, we have made the difficult decision to permanently close long-struggling store locations in Long Beach,” Kroger explained in a statement. “This misguided action by the Long Beach City Council oversteps the traditional bargaining process and applies to some, but not all, grocery workers in the city.”
The city council, by paternalistically overruling supply and demand setting the price of labor in the free market, intended to help grocery store workers by rigging negotiations in their favor. The politicians really just handed hundreds of people their pink slips.
The layoffs do not bother the city’s vice mayor, Rex Richardson. “Our job is to keep providing for the residents,” he told the Long Beach Press-Telegram. “I’m not shaken.” But the job of a city official does not pertain to providing for residents. People provide for themselves. And because supermarket workers rather than politicians lost their jobs over this, it surprises nobody that Richardson feels “not shaken.” Some people prefer to look good rather than do good.
This phenomenon extends beyond Long Beach. The fact that the states with the highest minimum wages — Washington, Massachusetts, California, New York, and Colorado — also register unemployment rates above the national average speaks to these unintended consequences even if politicians choose not to listen.
Another columnist, Milton Friedman, perhaps explained it best in another magazine, Newsweek, in another time (1972): “The true minimum-wage rate is zero — the amount an unemployed person receives from his nonexistent employer.”
Caesar is not above the grammarians. He’s not above the mathematicians, either. The real minimum wage is always and everywhere zero. The higher politicians push the legal minimum wage the more this truth becomes evident and obvious.
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That’s right, the Grinch (Joe Biden) is coming for your pocketbooks this Christmas season with record inflation. Just to recap, here is a list of items that have gone up during his reign.
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