Last Friday the Minneapolis City Council approved a $15 an hour minimum wage ordinance however, they were unable to overturn the laws of supply and demand.
Of course, the ordinance sounds good – especially for workers at or near the poverty line which, for a single person is just over $12 thousand per year. On paper, these workers will see their annual income nearly double, even after taxes. But the reality is nothing to be excited about.
While laws can be written that essentially demand doubling the pay for low-skilled and inexperienced workers, there is simply no way to mandate how businesses will deal with such unsustainable labor costs. Small businesses are left facing some pretty unsavory decisions.
If they increase their prices people will buy less and they won’t be happy about it. Those of us who spoke out against Donald Trump’s hypothetical tariffs during the 2016 campaign warned about the devastating effect that a 30% increase in Mexican imports would have on working families. The same is true under these circumstances. However, under this new ordinance, if businesses chose not to raise their prices profits would be greatly diminished. Existing businesses would be stalled, left struggling and investors would be far less likely to invest in new businesses.
So, while people are happily reTweeting a video of Keith Ellison singing folk songs in celebration of Minneapolis’ new ordinance, employers in Seattle have been forced to cut nearly 4 million hours from low-wage workers per quarter under similar wage laws. Just as Obamacare created the “29ers” – workers who have had their hours cut because businesses were forced to provide enormously costly benefits to anyone working at least 30 hours per week – the wage mandate has resulted in Seattle workers losing $125 per month on average. That’s a key figure in a recent study that showed that for 37% of Americans, an unexpected bill of $100 would be financially catastrophic.
Mandating high wages for all businesses regardless of their business models hurts the people that Progressive politicians are making a spectacle out of “helping,” and once again confirms the prescience of Ronald Reagan’s famous 9 most terrifying words: I’m from the government, and I’m here to help.
It’ll be awfully difficult to celebrate Small Business Saturday every November if there aren’t any left open.
Minneapolis is already well acquainted with the repercussions of raising the minimum wage by legal force. In the fall of 2015 La Belle Vie – the single most important and influential restaurant in Minneapolis at the time – closed their doors forever after 17 years. Over the years, La Belle Vie had won countless awards and ushered in a new generation of chefs that went on to open over a dozen more restaurants throughout Minneapolis. Sustained success is hard-won in the service industry. The average profit margin for a restaurant is just shy of 4%. In August of 2015 Minnesota began instituting higher minimum wages without a tipped employee credit and by autumn of that same year, La Belle Vie had become unstable. It took less than four months for La Belle Vie to shutter its doors after being required to raise the wages of people who were being paid between $2-$5 per hour on paper but were actually earning $25-$40 per hour in tips.
This newly-passed ordinance again includes no exceptions for tipped workers, which is, well, crazy because nearly ⅗ of all workers paid at or below the federal minimum wage are employed in the hospitality and leisure industry, with the vast majority in restaurants. For most of these workers, tips supplement their hourly wages which means they don’t need help. Minimum wage earners tend to be young. Despite making up ⅕ of workers paid hourly, people under 25 make up about half of those who earn the federal minimum wage while just 2% of people 25 or older earn the minimum wage or less.
Liberal politicians have created a temporary shortcut to climbing the economic ladder, which is why 55% of Millennials favor a $15 minimum wage. But their promises cannot be kept without profits – the profits and success demonized by the left and held up as examples of greed to the 56% of our youth have a positive view of socialism.
The willingness to accept long-term insolvency for the immediate political benefit of promoting what is essentially a forgery of virtue is a cornerstone of modern liberalism. While Keith Ellison is singing, small businesses are closing their doors. While Donald Trump and CNN are busy feuding, cities like Minneapolis are aggressively socializing wages and Millennials are applauding them for it. This should be of grave concern to any conservative. This is the result of a worldview built on whimsical sentiment, and resentment. Young voters have been bewitched by Bernie Sanders – a man who has more houses to his name than meaningful pieces of legislation – into believing that commodities are rights when the fact of the matter is that commodities cost money. My right to free assembly doesn’t cost someone else money. This is not the case with healthcare, or minimum wage ordinances. Remember, Sanders won more votes among Millennials than Clinton and Trump combined.
And where is one most likely to encounter supporters of politicians like Sanders and Ellison? A record shop on Thayer Street in Providence; a book store in Lincoln Square, Chicago; a coffee shop in Five Points, East Nashville; a bar in Minneapolis, Minnesota; a thrift store in Boston; a riot in Berkeley, California. They are all drawn to these places because of the small businesses. Progressives advertise themselves as the champions of the poor. That is deeply misleading and dangerous.
Rather than teaching our youth to see what their neighbor has worked for, we ought to teach them to see the work they do. 153 years ago Abraham Lincoln said,
“Let not him who is houseless pull down the house of another; but let him labor diligently and build one for himself, thus by example assuring that his own shall be safe from violence when built.”
We have the freedom to pursue our best selves, in our work and otherwise. In the long term the use of government ordinances to bypass the experience that separates the rungs on the economic ladder is antithetical to laboring diligently, and is ultimately destructive to everything our youth are attracted to in places like Minneapolis. But in the short term it makes for great bumper stickers.