- The Washington Times - Monday, April 4, 2016

Moods were festive as governors in both New York and California signed bills Monday gradually raising the minimum wage in each state to $15 per hour, but many economists were less jovial and the California chief executive admits the bill “may not make sense” economically.

Thunderous applause and cheers of “Si se puede” broke out as Democratic Gov. Jerry Brown signed his state’s bill. The law will increase California’s minimum wage by 50 cents next year and to $11 by 2018, before increasing by $1 every January until 2022.

At his signing ceremony, Gov. Andrew Cuomo was joined on stage by Democratic presidential front-runner Hillary Clinton, who showed off her progressive bona fides by championing the law, saying it will set a national precedent for other states to follow.

“It’s a result of what is best about New York and what is best about America,” Mrs. Clinton said. “And I know that it’s going to sweep our country.”

President Obama also issued a statement praising the legislation in both states, calling for Congress to act similarly, while Democratic presidential hopeful Bernard Sanders promised to raise the federal minimum wage to $15 if he is elected. Mrs. Clinton has opposed such a federal move.

Mr. Brown said the issue is one of “economic justice.”


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“Economically, minimum wages may not make sense,” Mr. Brown said. “But morally and socially and politically, they make every sense, because it binds the community together and makes sure that parents can take care of their kids in a much more satisfactory way.”

Many economists agree with Mr. Brown’s sentiment that minimum wage laws don’t make much sense.

Although Donald Boudreaux, professor of economics at George Mason University, said “reasonable people can dispute the magnitude” of the job loss resulting from increasing the minimum wage, he said virtually no economists deny that raising the cost of labor makes labor less attractive to employers.

He said the laws will hurt the very people they purport to protect: society’s least advantaged.

“A particularly pernicious effect of the minimum wage is that the worst consequences, the people who are most likely to be harmed by it, are the people who can least afford to be harmed by it,” Mr. Boudreaux said. “Not just teenagers, not just unskilled workers, but the least advantaged teenagers, who went to bad schools, who are from broken homes, so they don’t have any social connections at all, or the single mom without transportation of her own, those are the workers who are least likely to be employed under the minimum wage.”

James Sherk, a research fellow in labor economics at the Heritage Foundation, said California’s law will be particularly devastating because of the high level of low-skilled labor in the state in rural, agricultural areas.

“This is going to cover one in three workers in California based on current wages,” Mr. Sherk said. “California’s minimum wage will be the highest minimum wage anywhere in the world.”

He compared the law unfavorably to the minimum wage in France, where the Socialist Party is currently in power.

“The French government, in terms of purchasing power parity dollars, what the minimum wage actually purchases, the French minimum wage is about $11 an hour,” Mr. Sherk said. “And when this is phased in, after inflation, it’s going to be about $13.50 an hour. So we’re looking at a California minimum wage that is something on the order of 20 percent greater than what a French government, under the control of the Socialist Party, considers a reasonable and prudent minimum wage. That’s pretty stunning.”

Mr. Boudreaux said the California and New York laws could prove ruinous because of how drastically they raise the price of labor.

“Fortunately, most minimum wage increases in the U.S. have been small,” Mr. Boudreaux said. “But now, we’re getting into the territory in places like California where the minimum wage is rising by 50 percent, from $10 to $15. I wish these people would ask themselves, ‘What other goods do you know of, where if you raise the price by 50 percent, that that will not cause buyers to reduce the amounts that they buy?’”

“In my view, it’s just a lot of wishful thinking on the part of people who do not want to come to grips with the fact that labor markets are subject to the laws of economics no less than are markets for apples,” he said. “If you raise the cost of workers, you reduce the attractiveness of those workers to people who buy them. And the people who buy workers are called employers.”

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