The nation’s post-election leftward lurch is gaining momentum. Six states, including New York and California, are agitating for a boost in the minimum wage. Sen. Tom Harkin, Iowa Democrat, wants the federal government to set a nationwide wage floor that will automatically rise each year. Not to be left out, D.C. Council Chairman Phil Mendelson on Tuesday circulated his proposal for a 55 percent increase in the minimum wage over the federal level, which he would only apply to employees of the “big box” retailers that liberals love to hate.
It has become fashionable to pick on the stores that built their success by offering a wide variety of goods all in one location at the lowest possible cost. So any shop in the District with retail space of at least 75,000 feet whose parent company has a gross revenue over $1 billion would have to pay employees $11.75 per hour while smaller competitors would have the advantage of paying their workers just $8.25 per hour. What this means is the price for entry-level labor at the largest employers would jump in a market where 20 percent of teenagers are without a job and overall unemployment is above the national average at 8.5 percent.
The super-minimum wage is a slap at Target, Walmart and the latest additions to the city, Costco and Lowe’s. These stores are rich sources of a livelihood for those who have never worked before. They give teenagers a chance to pick up the knowledge and skills they will need to transition to higher-paying jobs. As much as the city Council despises these corporate giants, the victims of their policy are the least well off. Big box stores operate on thin margins, so to stay profitable they must either raise prices to cover increased expenses or cut hours and the number of employees. That means the cost of groceries and other necessities will rise and the most vulnerable will see the door slammed on their opportunity to work their way out of poverty. It’s a guarantee the District’s unemployment problem will continue to grow.
The same holds true of the more modest wage increases in New York, where unemployment is 8.2 percent, and California, where unemployment is a stunning 10 percent. The most basic law of economics says demand falls as the price increases. Forcing a large wage increase means a decrease in hiring. To be sure, the government-mandated higher wage can result in a paycheck boost for a handful of lucky employees, but this narrow benefit comes at a great cost to many with less skill or experience.
Minimum wage laws are a classic example of feel-good legislation. Lawmakers who can’t see beyond their good intentions hurt those they are trying most to help.
The Washington Times