The Minimum Wage Follies

Ten days ago, LA made a historically dumb decision to raise its minimum wage to $15 an hour. The usual chorus of Leftists emerged to claim that the contention that raising the minimum wage destroys low-wage jobs — a premise that was accepted by most economists until about two years ago — has been “debunked” as a myth (it hasn’t and it won’t be because the Law of Supply and Demand isn’t magically suspended for low-wage labor).

Some of the biggest supporters of the minimum wage hike were labor unions. You may wonder why labor unions would support hiking the minimum wage since most labor members don’t make minimum wage. The reason is that many union wages are pegged to the minimum wage and are set to automatically rise if the minimum wage does. It further gives them leverage in negotiations. If the minimum wage if $30,000 a year, it gives them an argument for larger starting union salaries. And since, in California, most labor arbitration is done by former union lawyers, it’s a nice racket. So their support has nothing to do with how much they care about the poor masses. It’s about cynically playing on sympathy for those masses to leverage their own pay hikes.

The unions have been at the forefront of claiming that the idea that minimum wage hikes destroy jobs is a myth. Well, guess what folks: they are perfectly aware of what a higher minimum wage will do. Why else would they want this:

Labor leaders, who were among the strongest supporters of the citywide minimum wage increase approved last week by the Los Angeles City Council, are advocating last-minute changes to the law that could create an exemption for companies with unionized workforces.

The push to include an exception to the mandated wage increase for companies that let their employees collectively bargain was the latest unexpected detour as the city nears approval of its landmark legislation to raise the minimum wage to $15 an hour by 2020.

For much of the past eight months, labor activists have argued against special considerations for business owners, such as restaurateurs, who said they would have trouble complying with the mandated pay increase.

But Rusty Hicks, who heads the county Federation of Labor and helps lead the Raise the Wage coalition, said Tuesday night that companies with workers represented by unions should have leeway to negotiate a wage below that mandated by the law.

So here’s how this two-step works:

1) the unions advocate for a higher minimum wage.

2) the raising of the minimum wage either triggers pay hikes for union members or gives them a leg up in negotiations.

3) However, they allow exceptions for industries that might have to lay people off … as long as those industries are unionized.

4) Industries that can’t pay the minimum wage either leave or … become unionized.

The net result? More money for unions, more union members, less jobs and higher prices for everyone else. And liberals wonder why we are so cynical about Big Labor.

Comments are closed.

  1. Biggie G

    If a $15/hour minimum wage is the panacea that will take care of all the ills of the poor, why are we waiting until 2020 to get there?  People will be dying in the streets, especially ethnic minorities and trans people apparently, when they are only making $12.50.

    I know that prices never increase and the buying power of a dollar apparently stays stable, so when the $15 wage comes in 2020, all will be right with the world.  Right?

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  2. Screamin

    It’s shit like this (and the related squawking from the many far-leftists and their mouthpieces) that really grinds my gears.  2010, 2020 or 2030…a $15.00 minimum wage does not solve anything and I tend to agree with Hal that it has very little to do with the actual AMOUNT of the wage and everything to do with power.

    Sheesh, people wonder why I don’t see their 5 posts per day on FB linking to HuffPo anymore…

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  3. Aussiesmurf

    So – unions are lobbying for policies that financially benefit their members, and increase their membership.

    Doesn’t sound unusual to me.  Why the headline?

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  4. AlexInCT

    You like to remove all doubt from everyone’s mind you are an idiot right? Why the headline? Because the people pushing for and selling this minimum wage never mention that the only people likely to benefit from this hike are union members and politicians beholden to unions. The rest of the people, especially the ones they pretend this hike will help, are going to get screwed and screwed hard when their jobs get taken over by automated processes that can do the job better and cheaper.  The headline is about the snake oil sales pitch used to garner support for this idiotic attempt to grossly over inflate the value of unskilled labor.

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  5. CM

    You like to remove all doubt from everyone’s mind you are an idiot right?

    Here we go with the personal abuse already. YAWN.

    This is yet another symptom of the larger issue, which continues to be ignored. It’s another attempt at a sticking plaster ‘solution’. Which mean opponents can just concentrate on attacking the sticking plaster and ignore the actual fundamental problem(s). The economic structure is no longer working – the rich increasingly engage in rent-seeking rather than productive investment. Increasingly they are not the ‘job-makers’. Stiglitz uses the example of buying the Beatles catalogue, which produces exactly zero jobs.

    Yeah I know, anything else automatically leads to billons of children being slaughtered in their sleep. Even questioning it probably gives half them end-stage cancer.


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