Gov. Brown Admits $15 Minimum Wage Does Not Make Economic Sense, Approves It Anyway

Herald Square, Manhattan, 24th October 2013

Why make economic sense when there is political advantage to be had?

This is pretty much the mantra of the statist politician.

The key thing to remember with increases to the minimum wage is that just because the government says that a job is now worth $15/hour doesn’t mean that it is. A job has a wage level which is economically sustainable. If that wage is not $15/hour it’s not worth $15/hour. However a government mandate can ensure that a job is PAID $15/hour. The problem is, in the world of economic reality this will translate into fewer employees and fewer hours if a business has a fairly tight margin. (And many if not most businesses with minimum wage jobs operate on tight margins, food service etc.)

But how a minimum wage negatively impacts jobs and the economy is a slightly abstract concept. Abstract concepts don’t work well with much of the electorate. Such concepts are harder to sell. And the politicians know this.

(From Reason)

Here’s the quote of what he said. Look for one little adverb that indicated (probably accidentally) exactly why the law was passed, even though Brown has previously been resistant to it:

Economically, minimum wages may not make sense. But morally, socially, and politically they make every sense because it binds the community together to make sure parents can take care of their kids.

The key word is “politically.” Politics don’t hold communities together. But they can keep entrenched interests in power.

And the thing is a $15 minimum wage isn’t morally or socially just at all. Businesses will go out of business. People will lose jobs and hours. But again, it takes a couple of steps to understand this.

Click here for the article.