Jonah Goldberg‘s latest column at National Review Online explores the negative unintended consequences of raising the government-mandated minimum wage.
With the exception of some very cynical labor unions that support a higher minimum wage because it amounts to an indirect subsidy of their members’ earnings and some politicians who know it is bad economics, the Fight for 15 movement is entirely well-intentioned. But good intentions do not automatically translate into good policy.
Last week, the Los Angeles Times reported that California’s recent decision to raise the minimum wage to $15 by 2022 is already having nasty consequences, accelerating the demise of the local apparel industry. “I used to pay $5 to get this sewn, and now it costs $6.50,” Felix Seo, the owner of L.A.-based Joompy told the Times, holding up a patterned dress. “But my customer doesn’t want to pay that, so I can’t sell it anymore.”
To stay in business, Joompy will probably have to start importing its clothes. “It will be impossible to make clothes in Los Angeles,” Seo said.
This is an old story. My grandmother was a seamstress in New York’s garment district. Those jobs left for the South almost 100 years ago, as costs in New York became prohibitive. They started leaving the South for Asia shortly thereafter.
Businesses don’t have to send their work to low-wage countries. They can simply hire robots. Already, many restaurants facing mandated wage hikes are moving to replace human cooks and servers with machines and iPads.
The Times article had a great little infographic breaking down “Who Gets a Raise” under the minimum-wage hike by age and race. Latinos got the biggest share, with 54 percent. Unfortunately, there wasn’t a companion chart showing how many of those Latinos will simply lose their jobs, resulting in the real minimum wage: zero.
