So many of the nonsense policies coming out of politicians these days are a result of nothing more than virtue signaling. “Look at me, I care about the little guy”
Hopefully, virtue signaling is motivating Gov. John Bel Edwards’s push to raise the minimum wage in Louisiana. If not, it means our Democrat governor doesn’t understand the first thing about basic economics, which is, make something more expensive and there will be less of it.
When government dictates the cost of labor, instead of the free market, employers are forced to look for other ways to make ends meet. This is especially true for small business owners. And in this age of rapidly and ever-expanding technology, options are plentiful.
Edwards wants to raise the minimum wage to $10 an hour by summer of 2022. That’s an increase of $2.75. The state’s current minimum wage, $7.25, is tied to the federal minimum wage. But Edwards’ plan could eventually raise the minimum wage even more. The governor’s plan also calls for tying the minimum wage to the Consumer Price Index.
For a small-business owner with tight margins, that’s a game-changer. Edwards’ mandate means an entrepreneur employing mostly entry-level workers with no experience will increase their labor costs by a third. What politicians won’t say is the vast majority of minimum wage earners are teenagers and are rarely head of households. Or they earn tips or commission in addition to their hourly rate.
The University of Washington conducted an exhaustive study of the impact of Seattle raising its minimum wage by $4 per hour. The hike ended up reducing hours worked in low wage jobs by 9%. The study found total payroll fell for low wage Seattle employees by an average of $125 per month since they were given fewer hours.
The Canadian based Fraser Institute, a free market promoting think tank, reports more than 100 academic studies on the impact of the minimum wage in 20 different countries overwhelmingly found increases negatively impact employment for low wage earners. In Canada, there have been at least 14 academic studies showing a 10% increase in the minimum wage is likely to decrease employment by up to 20% among young workers.
Louisiana has 36,000 fewer people in the workforce since Edwards became governor, according to the Bureau of Labor Statistics. And yet the rest of the nation has seen unprecedented job growth. The last thing we need now is to make it more difficult for Louisiana business owners to create jobs by ignoring the silent hand of the free market and mandating wage increases based on the whims of a virtue-signaling politician.
Edwards has little chance of getting a minimum-wage increase through the current legislature. He tried during his first term and failed. This crop of lawmakers is much more conservative and have more faith in the private sector than the last bunch. But simply pushing for the increase is a win for the governor.
“We know that an overwhelming majority of the people of Louisiana agree with us on this,” Edwards said Monday about his plan to raise the minimum wage.
And he’s right. Minimum wage increases are popular. According to a survey conducted by the Reilly Center for media and public affairs at LSU’s Manship School of Mass Communications, 81% of Louisiana residents favor raising the minimum wage to $8.50 an hour.
But most people have never had to run a business or meet payroll and be the last one to get paid each month. If you polled small business owners trying to make ends meet, the response to raising the minimum wage would be drastically different.
Most of us, at one point, earned minimum wage. We were young, inexperienced, and didn’t offer much to our employer. But the low skill, low paying job gave us a shot at breaking into the workforce and that eventually led to better opportunities. Edwards’ hope of raising Louisiana’s minimum wage would potentially rob many young people of that experience.
Email Dan Fagan at FaganShow@gmail.com.