Minimum-Wage Bill Shows Yet Again That Congress Is A Refuge For Know-Nothings
Democrats have many problems, not the least of which is an inability to understand, and for some the refusal to accept, basic economics. If they did, there wouldn’t be proposals to raise the federal minimum wage to a preposterous $25 an hour.
House Resolution 8555 would “place the federal minimum wage on a durable path toward a living wage,” requiring “large, highly profitable corporations to lead the transition.” Under its yoke, large employers would have to raise their lowest wage from the current $7.25 an hourto $15 an hour on Jan. 1, 2027, a more-than-double spike that would shock the market.
Large companies, defined as those with annual gross revenues in excess of $1 billion (there are more than 6,000 of them) or with 500 or more employees nationwide, will have to ramp up their minimum wage every Jan. 1 thereafter until the minimum hits $25 an hour on Jan. 1, 2031. Smaller companies will have to boost their hourly minimum to $14 next New Year’s Day and will have to meet the $25-an-hour standard by 2038.
“We can afford it,” declares Connecticut Democratic Sen. Chris Murphy, who late last month introduced a similar bill in the Senate. “It’s not like we can’t pay a $25 minimum wage, we just choose not to because we’ve become okay with dozens and dozens of people in this country making hundreds of billions of dollars.”
Who is “we,” Senator? Which company do you own? Which business did you start that will fall under the government’s wage boot? When was the last time you had to meet a company payroll? Anyone who would say “we” in this context is definitionally low-minded.
Minimum-wage hikes are a combination of economic tyranny (there is no moral authority for lawmakers to tell private businesses how much they have to pay their workers, so they simply delegated the power to themselves) and economic lunacy.
Raising the cost of anything, including labor, will lower demand, and in the case of a government-mandated minimum wage, that would be the demand for workers in the private sector.
In late 2023, the Congressional Budget Office said if the Raise the Wage Act of 2023 were passed and the federal minimum wage were increased in yearly increments to $17 per hour by July 2029 — just 18 months before the $25-an-hour wage floor of HR 8555 would kick in — there would be blood.
“Employment would be reduced because employers would respond by reducing their workforces,” says the CBO. “As a result, 0.7 million additional workers (or 0.4% of the overall workforce) would be jobless.”
The CBO does say that 400,000 who kept their jobs and received the higher wage would be lifted out of poverty. But what happens to those who no longer have jobs because employers had to cut labor costs, as well as those who aren’t hired because employers can’t afford them? Their wage is the true minimum — zero.
Of course, the results would be far worse under the $25 minimum that the economic dunces in Congress are demanding.
Projections are useful, but real life tells us even more, and the story is quite grim. The roughly 18,000 workers who lost their jobs because California forced a $20-an-hour minimum wage on the fast-food industry would agree.
In addition to killing jobs, minimum-wage hikes also increase prices, as employers pass on to consumers as much of their additional labor costs as is possible. This would, says the CBO, “lead consumers to purchase fewer goods and services.” Employers would then “produce fewer goods and services, and as a result, they would tend to reduce their employment of workers at all wage levels.”
Economic ignorance and political arrogance among policymakers have been creating messes for generations, and in one particular instance — causing and then prolonging the Great Depression —wrecked so many lives that history remembers that period as one of our worst episodes of deprivation and grief. We’ll keep getting more of the same, though, as long as voters continue sending midwits, nitwits, and petty tyrants to Washington.
— Written by the I&I Editorial Board
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