Decades ago, evil scientists working in a dark, dank lair devised one of the most powerful weapons to destroy the prospects for low-skilled people who want to improve their conditions by entering the workforce for experience and skills: the so-called “minimum wage” law.
The latest high profile locale to step into its own mental dung is San Diego County, Calif., and a new piece by Dan McSwain for the San Diego Union-Tribune sheds important light on the subject.
McSwain observes that San Diego led California on the over-the-cliff drive for mandating higher minimum wages. While California as a whole is scheduled to up their minimum wage to $15.00 per hour by 2023, it is pushing the hikes by smaller amounts each year. In January of 2016, the mandate rose to $10.25 per hour, then to $10.50 this year, and so on.
In San Diego, the mandate began last year at $11.50 per hour, and the consequences, predictable as they were, came to bear.
Amid an abrupt slowdown in growth, nearly 4,000 food-service jobs may have been cut or not created throughout San Diego County from the beginning of 2016 through February of this year, according to an analysis of federal payroll data by Lynn Reaser, chief economist of the Fermanian Business & Economic Institute at Point Loma Nazarene University.
The report notes the regional and state economy for restaurant commerce had been on the rise during that period, so the county should have seen approximately 5,200 jobs created; instead, the county gained just 1,300.
This is what minimum wage statutes do. They drive up the price of goods and services, forcing producers who could offer their product at a low price and actually get work to jack up their prices, at which point they will find fewer takers and will be forced to cut their workforce. Ultimately, the lowest skilled employees will not find work at all unless it is in the black market.
The only way to lift the wages of low-skilled workers is to increase demand for employees, and the only non-inflationary way to do this is by allowing consumers to do precisely what they try to do: to get the best buy for their bucks and have money left over. By saving on each purchase, consumers can then spend that money on other things, increasing the demand for employees, and, as a result, increasing the bargaining power of each potential employee. If the consumer does not spend the extra cash, he or she will save it, and that can be lent at naturally low interest rates to new entrepreneurs, which, of course, increases the demand for employees and increases their bargaining power.
These laws of supply and demand are, of course, immutable. No amount of wishful thinking on the part of politicians can change them.
As has already been seen in San Diego, all politicians can do is order people around and shut the most vulnerable people out of the market. The minimum wage statute is one of the most powerful weapons ever created to do just that.