“Economically, minimum wages may not make sense. But morally, socially, and politically they make every sense because it binds the community together to make sure parents can take care of their kids.” ~ California Governor Jerry Brown, as he signed the Minimum Wage Increase Bill – April 5, 2016
I have news for Jerry Brown. If raising minimum wages doesn’t make sense economically it is immoral to sign it into law. He can say it makes sense morally, but it doesn’t. If something doesn’t make sense economically, why would you disrupt the economy, force people to lose their jobs, cause companies to move out of state, and hurt the people on the lowest economic rung? It is a completely immoral act.
The reason someone of the far-left like Jerry Brown would sign into law such an uneconomic bill is for two reasons:
1) He will satisfy the public employee unions who have been pushing him to do it. By signing that bill into law the dues paid to the unions will increase dramatically. Why would he want to increase the coffers of the unions? Because it is the unions who fund Democrat candidates in California. Public employee unions own California Democrat legislators who will pass whatever legislation the unions want passed. No Democrat in the State of California gets elected if the unions don’t want him elected. So all Democrat legislators in California are puppets of the public employee unions.
2) He can pretend to voters that he did something good for the community. He can say, effectively, that he raised the income of the lowest earners. What he doesn’t say is that he raised the income of the lowest earners who are able to keep their jobs, but he facilitated employers into eliminating jobs, and in some cases substituting electronic devices for employees. Voters don’t know the economic effect of an increase in the minimum wage so they think that Brown did something good. Therefore, they will vote Democrat Party at the next election because they will say look how Governor Brown is looking out for us poor people, not realizing that Governor Brown is making life more difficult for poor people.
Democrats are smart. They know that raising the minimum wage hurts those at the lowest rung of the economic scale. They don’t care, because they realize that the voters don’t know that. So they sound like they are doing good by raising the minimum wage, when, in fact, they are doing great harm. Further, it is totally ineffective in terms of increasing the buying power of minimum wage employees. Raising the minimum wage is inflationary. Prices are increased to accommodate the increase in wages. If minimum wages are increased to $15 per hour, then the next level of employees will also want a raise, and so on. So then, pretty soon, the $15 minimum wage winds up buying the same amount of goods and services that the previous $10 minimum wage bought. The only benefit was to political hacks like Brown who will now keep his Democrat voters (until they wise up) and who will get the unions to pay more money to elect more Democrats.
Government has no business setting prices or wages. A free market will set the proper prices and wages. The best way to increase employment and the prosperity of entry-level workers is to make the minimum wage $0.00 per hour. In other words, no minimum wage.
Listen to Milton Friedman on the subject:
It is immoral to sign into law a bill which you know makes no economic sense. But those on the Left don’t really care.