California has one of the largest economies in the world, but its economy has been in decline for decades. The reason is because the Democrat party has taken over California and imposed job-killing socialism, including high taxes and radical environmental laws. It is reported that 225,000 productive, middle-class people are fleeing California every year whereas the state was a population magnet for 150 years.
Every statewide office in California today is held by a Democrat. Now California has become the first US state to impose a $15 minimum wage, by 2022. And you may say that 2022 is a long way off, but it is not. California already has the highest minimum wage in the nation at $10 an hour. This already is one of the many liberal policies harming the California economy, and a $15 minimum wage will have bad effects on the economy wherever it is imposed.
It is crucial to remember what this increase means: This does not just refer to minimum-wage earners. This means that anyone working in California must be paid at least $15 an hour. This will be devastating to small businesses across the state, many of which are marginal operations that can’t afford big increases in their costs.
Naturally we are told by Democrat party propaganda that a $15 minimum wage will “increase income equality” and “help those on the bottom” and “narrow the gap between rich and poor”. This is nonsense. It will produce the opposite effect, as all socialist policies produce the opposite effect of their stated goals.
To understand what this means, let us first consider the policies from the Democrat party that have been making Americans poorer over the last 50 years:
*The terrible public education system in America is controlled lock, stock and barrel by leftists, Democrats and teacher unions. The failure of this system to educate tens of millions of Americans is one of the leading causes of poverty in the US.
*The advocacy and acceptance of single motherhood by the Democrat left has created widespread poverty and dependency. Single mothers and their children are always statistically poorer than married mothers and their children.
*Radical union activism has destroyed, or obstructed the creation of tens of millions of good jobs in America over the last 60 years. The steel industry, the railroads and the US auto companies are three major industries that have been badly harmed or outright ruined by the unions.
*Urban corruption and bureaucracy in cities controlled politically by the Democrats has thwarted job creation for tens of millions of people over many decades.
*Over-taxation has driven thousands of companies, and entire industries, out of business or out of the US, taking their jobs with them. Ditto over-regulation. General Electric just moved its headquarters out of Connecticut after state Democrats socked the company with huge tax increases.
*Militant environmentalism, which has thwarted economies nationwide and driven jobs overseas, has dramatically increased poverty in the US, particularly in rural areas.
*The Democrats’ War on Corporations since the 1960s has led to millions of job losses, and the decline of a strong corporate culture, and its good jobs, services and products.
*Obamacare regulations require that any employee working more than 30 hours per week must be given expensive health insurance. Since many businesses cannot afford this, they have cut the work week to 29 hours for many millions of workers, cutting those workers’ income by 25%, and making them poorer.
*Powerful state employee unions in California have pushed the cost of government way up, increasing taxes and driving businesses and individuals away. The company called Intel, the “grandfather” of the Silicon Valley computer revolution, has not created a single job within California since the year 2000, but is expanding in other states.
OK, so now in order to allegedly help poorer Americans, the very same Democrats who made tens of millions of people poor in the first place are pushing for more of their policies, in this case a higher minimum wage. New York state now is considering a $15 minimum. And while the $15 minimum will certainly benefit some workers, it will produce harmful effects for the overall economy and for the rest of the population, i.e., it is just another destructive Democrat policy like those mentioned above. Here are the reasons, proven by experience, why this increase will be counterproductive:
*It is an artificial increase imposed by government, not a natural increase produced by the economy. Such impositions never produce the desired effect. They always produce the opposite because they are artificial. Since the economy is ruled by natural laws, you cannot artificially adjust it without negative consequences.
*This government-imposed increase is easy to do; politicians simply pass legislation. But if this actually worked, then legislation should be able to make everyone prosperous and happy, right? Wrong.
*Government-imposed increases in the minimum wage always lead to immediate job losses, and also to long-term job losses. A big increase will lead to big job losses. Companies will be forced to fire employees, or not hire them, rather than pay them the higher minimum wage.
*Companies will deny raises to more valuable higher-up workers in order to get the cash to pay unskilled workers on the bottom. This will create unhappiness among the more skilled workers higher up on the salary chain. This is bad for any business since high-skilled workers are much more rare and valuable than unskilled workers, who are plentiful.
*Companies will cut benefits to all employees to make up for the $15 minimum wage. This already has happened in Seattle.
*The labor unions who are pushing hard for the $15 minimum get the political reward for advocating the $15 minimum, but don’t have to pay anything or risk anything for it. They just get their buddies in the government to impose it.
*The $15 minimum is de facto unionization via government. Since the unions have destroyed their own power in the private economy through decades of job-killing demands, they now have to work through the government.
*People from bordering states like Arizona and Oregon will go into California to work for the higher wages. This will cut the labor supply in the border areas of Oregon and Arizona, pushing up labor costs in those areas.
*Companies like McDonald’s might well replace minimum-wage jobs with cheaper automation. For instance, customers could be asked to punch in their own order on a computer screen rather than giving the order to a $15-an-hour counter clerk.
*Many companies will make up for the $15 minimum by raising prices. In other words, the minimum wage increase will be simply a transfer wealth from consumers to minimum-wage employees. It is a classic socialist tactic, like a welfare program. This increase in prices will hurt companies’ competitive stance in the economy. If McDonald’s has to start charging $2 for a hamburger, McDonald’s will eventually go out of business because its success is based on its low prices.
*The $15 minimum will drive jobs to lower-wage states and nations, harming California and the US. This is how the US lost millions of great jobs even in the post-World War II economic boom – because of the greedy unions demanding too much money. Unionized dock workers on the West Coast today earn $100,000 a year just in salary, and they are still striking and staging work slowdowns.
*The jobs that are destroyed or never created because of the higher minimum wage will lead to millions fewer people able to even enter the workforce. Thus they can never train for or advance to better jobs if they don’t have a job to start with. This will increase poverty, not fix it.
*The $15 minimum will lead to higher teenage unemployment and higher summer unemployment since companies will not want to pay that much for entry-level workers or seasonal workers.
*Managers or other employees will take over some of the jobs of minimum wage employees who won’t be hired, or will be fired. For instance, a manager might be asked to mop the floor or stock the shelves or do deliveries in addition to his normal duties. This will shrink employment numbers, as socialist economies historically have high levels of unemployment.
*The $15 minimum is expected to lead to a $3.6 billion annual increase in labor costs for California taxpayers in higher wages for state government employees. This is another socialist transfer of wealth from consumers to people who vote overwhelmingly Democrat.
Employers themselves should always set the wages that they pay and here is how:
If a worker earns $10 an hour and demands a raise and the employer does not think that the job or the employee is worth more, then the employer should advertise the job. If a suitable applicant is found willing to work at $10 an hour then that applicant should get the job.
Because the economy – the private labor market – is providing a supply of willing workers at $10 an hour and thus there is no natural pressure for higher wages. And under Obama tens of millions of people are desperate for any type of work at any wage. Thus the Obama Depression, and not stingy employers, is holding wages down.
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