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Minimum Wage, Maximum Stupidity

By Larry Elder

Warning: Over certain issues, otherwise intelligent people may, repeat, may suffer instantaneous, and often irreversible, brain-freeze.

Take the minimum wage. The City Council in Santa Monica, California, a town also known as "Moscow on the Pacific," just voted unanimously to consider a minimum wage of $10.69 an hour. Plus benefits!

California’s $5.75 hourly minimum wage already exceeds the Federal rate. Not enough, according to Santa Monica Councilman Michael Feinstein, "Trickle-down economics don’t work. They’re violent to people." And, an activist with something called "Santa Monicans Allied for Responsible Tourism" blasted the hotel industry for failing to increase the wages of its workers. "Those people we are seeking to help are already hurting. It’s time for Santa Monica to get on the living wage bandwagon."

Santa Monica, decades ago, passed extremely stringent rent control laws. The effect? An increase in homelessness, a disincentive to create new housing, and a greater rental population percentage of middle- and upper-class residents, crowding out people lacking the guile or contacts to finagle a below-market apartment. An old story. The poor and blue-collar workers, whom the rent control laws presumably intended to help, suffered the most.

This same logic applies to minimum wage: One interferes with the free market at one’s own peril.

A recent editorial in "Investors Business Daily" put it this way: "Minimum wage laws, an icon of the political left, are particularly damaging to low-income workers. Many are locked out of jobs. The Employment Policies Institute figures that the first 50 cents out of the $1.00 hike in the minimum wage in 1996 through 1997 cost 645,000 jobs."

If the simple waving of a minimum wage wand cures poverty, why set the rate at $10 an hour? Why not make it $50 an hour? At $50 an hour, everybody makes at least $100,000 a year!

Rarely do economists agree on any given issue. But here, however, almost all economists agree: Minimum wage hikes destroy jobs. And they hurt the very people that the victicrats purport to help—women, minorities, and teens. Most minimum wage workers are not heads of households, attempting to raise a family on $5.75 an hour.

But, suppose that the typical minimum wage earner were a married man with a two-child family. Can we agree that one should defer producing a child until one can feed, clothe, and educate that child? Shouldn’t a minimum wage person have a minimum family, at least until skills, and therefore, future prospects, improve?

Recently, a major newspaper ran an article bemoaning rising rents, and how this affected a particular "working poor" family, a family, mind you, which includes three children. The husband holds down a minimum wage job as a chef-assistant, and his wife works as an Avon saleswoman and baby-sitter. Three kids? What’s the bare-bones cost to raise one child in this country? Depending upon the local cost-of-living, the price tag probably averages about $10,000 a year for one child.

Newspapers often write sympathetically about the travails of a poor family getting by on a husband’s minimum wage. Never mind the mom-and-pop hot dog stand, with a couple of minimum wage workers, scratching out a living against tremendous competition. A Santa Monica dentist said of the proposed $10.69 minimum wage hike, "This isn’t a living wage; this is a death wage." And, a Santa Monica hotel manager said, "People making $10.69 an hour will be happy at first, but then they’ll realize the work they’re doing is for two or three people."

A recent "Investors Business Daily" article explained how minimum wage hikes kill jobs, "It’s clear to everyone but the most diehard socialists how this happens. Employers who can afford to pay four workers $5.00 an hour can’t afford them all at $6.00 an hour. Somebody has to go. So, three are marginally helped—a fourth is simply without a job. And the fifth, sixth, and seventh don’t get hired in the first place."

Is it possible for so many people who support the minimum wage to be so wrong? A recent Montreal Expos-San Diego Padres baseball game perhaps provides an explanation. With San Diego batting, Montreal recorded three outs, and should have headed towards the dugout. But the apparently brain-frozen Expos remained in the field, and the next Padre batter ran the pitching count to 2 and 1 before somebody woke up. Montreal should be especially embarrassed, since the umpire’s gaffe stood to cost them more. Sixteen thousand people attended the game, yet the home team, the visiting team, the umps, and the fans all sat, nobody screaming, "Wait a second. There are already three outs!"

As to the minimum wage, its damage is documented, the lack of beneficial effect well known among economists. How, then, can so many otherwise normal, intelligent people be so wrong? Ask the Montreal Expos. It happens.