Last year Senators Angela Bryant (D-Halifax), Valerie Foushee (D-Chatham) and Terry Van Duyn (D-Buncombe) introduced legislation (SB 174) to raise the state’s minimum wage to $15 an hour as a way “to advance economic security in North Carolina.”
Thankfully the bill didn’t pass. We’ve taken pains to point out the many reasons why raising the minimum wage never has nor ever will be a good anti-poverty program.
Simple economics teaches that when you pay someone based on law rather than the value of their skills, you create many problems.
Efforts to boost the minimum wage are further complicated by growing government regulations that — when you add in the cost of training and benefits (health care and paid leave) –, most companies simply find it is too expensive to hire minimum wage workers.
Instead of paying low skilled workers high wages and more benefits, companies are choosing to automate.
Have you visited companies like McDonalds or Panera Bread recently? Observe how those companies are automating and how you can place orders via a machine – not a person.
Thus – once again – one of the major outcomes of raising the minimum wage is to actually eliminate more low wage jobs; the opposite of what the policy was supposed to do.
What’s more the cost structures businesses for training employees and employee benefits actually work to accelerate the automation process.
This is the exactly what is happening in California. Michael Saltsman of the Wall Street Journal tells San Francisco supervisor, Jane Kim to get is trying to get a proposal onto a statewide ballot that would place a tax on companies that automate and eliminate jobs for humans. (Wall Street Journal, subscription may be required).
A rising minimum wage also had a negative effect on job opportunities for older, less-skilled employees in manufacturing. Instead of spurring self-reflection among advocates for new labor mandates, these consequences have inspired them to propose new laws to solve the problems caused by old ones.
Consider the irony: San Francisco voters were promised in 2014 that the minimum-wage initiative backed by Ms. Kim would increase consumer spending by north of $100 million—without affecting employment. Now money from the new robot-tax proposal will be used to offset a reduction in job opportunities, in part caused by the rising minimum wage. . ..
But states like California are accelerating the trend by creating labor-cost mandates that exceed the productivity of employees to which they apply. It’s futile to try to resist the downward slope of the labor demand curve. Instead California’s do-gooder legislators should study up on the law of unintended consequences.
Yet more evidence why North Carolina lawmakers should do all they can to resist calls for a $15 an hour minimum wage.