Tuesday, September 20, 2016

The Maximum Rage Over the Minimum Wage

Although California Governor Jerry Brown is as staunch
a liberal Democrat as you are ever likely to find, he recently
balked at raising his state's minimum wage, already well
above the present national minimum wage of $7.25 per hour,
stating that it would "put a lot of poor people out of work".
However, he regained his ideological moorings, relearned his
ideological catechism, and signed into law a bill mandating
raising California's minimum wage to $15 per hour, the lofty
new wage floor to reach this mandated level by 2022.

Gov. Brown made a bargain with Democrat lawmakers and union
leaders to jack up the minimum wage in their state every year
for the next six years until the targeted wage is reached. California's
current minimum wage is $10 per hour, considerably above the
aforementioned current U.S. minimum wage, but the union chieftans
want to hike California's wage because --- dirty little secret --- the
unions' contracts all mandate that the workers in their rank-and-file
membership MUST be paid AT LEAST a certain percentage above
the prevailing minimum wage in the state where they work. The
more the workers are paid, the more the union can charge and extract
from them in union dues. This is standard practice with unions all
over the country, and it is of course why unions are big fans of the
minimum wage.

Ah, but here's the rub: Many California workers will become jobless.
Why? Employers will not pay more for in labor costs than they think
the labor is worth, governmental mandates be damned. So while they
will have to pay their employees at least the new minimum wage of
$15, the minimum wage law does not mandate that they have to keep,
let alone hire, more workers at that wage level. What will these firms
do? For starters, they can automate their workplaces. They will simply
acquire machines, or computers, or robotics to perform the tasks that
they used to hire people to do via their physical activity. Another tack
that employers can take is to cut their staff and parcel out the tasks that
their low-level workers used to perform to their remaining workers who
are up a step or two on the company rungs, increasing their workloads.
And the employers figure that even after increasing the wages of these
workers in exchange for assigning them more work, they will still save
on wages by not having the low-level workers that they used to employ
and having to pay them artificially-inflated wages, inflated by govern-
ment fiat.

The unemployment rates in various cities and regions of California are
presently at dire levels: Fresno's rate is currently 10.5%, Merced suffers
from a 12.6%  rate of joblessness. These are just two examples of that
state's troubling situation. And the legislation Gov. Brown signed into
law will only exacerbate these numbers and their accompanying pain,
while benefiting the union and Gov. Brown, along of course
with his fellow Democrats who have not just control but dominance
over both chambers of California's legislature, as these Dems all receive
most generous campaign donations from their union supporters.
And this law is being handed down at a time of great economic hard-
ship, much of it due to the caprices of the Democrat's Fearless Leader
in the White House.

The California Department of Finance had, in 2015, opposed a gradual,
more modest increase in the state's minimum wage to $13 per hour due
to "significant, unbudgeted costs." California would, for example, have
had to pay billions in higher wages for government workers, even
seasonal employees at parks. The CDF's analysis also found that the
minimum wage raise would make for slower job and income growth,
thus claiming considerable tax revenue. Unemployment benefits to
resultant displaced workers would have soared to $115 million by this
current year, and over a half-billion dollars by 2019 with the climbing

People and businesses have already been leaving California in droves
over the past few years thanks to the already towering minimum wage
there, along with astronomic taxes and entangling regulations. Texas
and Florida are favorite places of refuge for the departing beleaguered
Californians, as these states have fewer taxes, less regulation, and
lower minimum wage levels. But with Gov. Brown, the Democrat
legislators in Sacramento, and their union pals, it's Statism uber alles,
and anyone choosing to remain in California has to live and deal with

There is a lesson for the rest of the country here. Let us pray that it will
be learned and profited from.


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