California Dreamin’: Minimum Wage to $15

The Minimum Wage is one of the worst offenders of all well-meaning but bad ideas. When I hear people agitate for a higher minimum wage, I assume that they really believe they are helping the most vulnerable workers in the labor market. The truth is the opposite: they are harming the most vulnerable workers in the labor market. But I think most Minimum Wage supporters do not understand that. Considering the piss-poor state of economic education in America, it is not a surprise.

Out of California, we read this:

California lawmakers and union leaders have reached a tentative deal to raise the state’s minimum wage to $15 over six years that could avert a campaign to bring the issue to voters, two California newspapers reported on Sunday, citing unnamed sources.

The deal, if passed in the state legislature and signed into law by Governor Jerry Brown, would add to a wave of minimum wage increases at the state level in the United States, where the federal minimum wage has remained at $7.25 an hour for more than six years.

…Raising the minimum wage to fight income inequality has cropped up on many Democratic candidates’ agendas ahead of the November presidential, congressional and state elections.

Income inequality is one of the most fake political problems ever invented. The inequality of incomes across a country is utterly irrelevant. Margaret Thatcher took care of this idea years ago:

Income inequality is irrelevant. Poor people are still just as poor despite however less wealthy the rich might become. But it makes great cannon fodder for pandering politicians looking to stir up envy and hatred among voters. Envy and hatred motivate people to the ballot box.

We continue:

But the idea has drawn fierce opposition from conservatives and some business groups, who have said a higher minimum would harm small businesses and strain the budgets of government agencies forced to pay more to workers.

Let’s start by calling this irresponsible,” said Michael Saltsman, research director at the Employment Policies Institute, a fiscally conservative think-tank that has argued against minimum wage hikes.

“When you talk about these really massive jumps it’s no longer an impact at the margin, it’s the sort of thing that could be the difference between a business staying open and closing,” he added.

How will employers deal with this? There is only one way to deal with it: cut costs.

Selwyn Yosslowitz said that minimum wage hikes add increased pressure to restaurants, which already operate on very slim margins. With the minimum wage going up, Yosslowitz said he’s going to have to rethink his menu and what dishes his restaurants serve.

“First, you have to raise prices, otherwise you’ll be out of business,” said Yosslowitz, president of the Marmalade Café, which operates seven Southland restaurants and an outlet at LAX. Restaurant owners also have to think about “re-engineering the menu” to require fewer kitchen workers.

“We will try to re-engineer the labor force,” he said. “Maybe try to reduce the number of bus boys and ask servers to bus tables.”

So, people will get fired. Employment becomes more expensive, and less people are employed. Imagine that!

The people who avoid getting fired after the $15 minimum wage will receive a nice raise. But the people don’t avoid getting fired will start receiving a new minimum wage of $0.00. As the minimum wage rises, these workers will get screwed. The workers at the bottom of the food chain will be dumped.

It is interesting that a politician might have a problem with a worker being paid $1 less than the Minimum Wage, but has no problem with a worker getting laid off and receiving $0 instead. For some reason, politicians would rather a worker be fired and receive $0.00 per hour than keep working for less than $15.  They are actively encouraging unemployment.

This is convenient for left-wing politicians who support both a high minimum wage alongside increased welfare. It creates a pleasant little self-reinforcing voter mill. “Now that you’ve been disemployed by my minimum wage policies, you need to rely on my welfare policies to survive. Welcome to the family. Vote for me!”

It gets worse. The bane of Minimum Wage law is almost upon us: Robotics. There are already companies trying to implement robots in place of minimum wage employees. Robots don’t need a wage. They don’t fake being sick to get out of work. They don’t complain and laze off on the job. Robots do what they’re told, and do it well. They can do it seven days a week if they need to.

The Minimum Wage is a subsidy to robotics in the workplace. As the price of human labor is increased by law, the relative costs of robotics will become less and less. I discussed this in relation to roboticized fast-food over 3 years ago:

If Minimum Wage advocates push for McDonald’s to provide a “living wage” (which is stupid, because grunt jobs at McDonald’s were never meant for living on in the first place), they cause labor costs to increase. As the cost of the machine comes down, expensive labor regulations provide sort of an upward push that meets the cost halfway; whereas use of the machine may not have reached a price-level parity with human labor until 30 years from now, expensive labor regulation speeds this process and makes the automated option more attractive in, say, 20 years instead of 30.

This is detrimental to workers. In the organic process, the coming developments in the labor market typically move much more slowly and obviously. The writing becomes apparent on the wall, and laborers have time to begin filtering out of that particular market and into different markets which will provide a wage they are satisfied with. When Minimum Wage advocates shove an increase in the wage through, it can cause this process of encroaching automation to sharply lurch forward (in a manner of speaking), which catches entire strata of workers off-guard and causes them to scramble for other employment.

In many cases, they did not have the warning on coming developments in the labor market that they might have within the organic process. It makes the transition much more painful.

I was a worse writer back then. It’s almost painful to read. But the ideas still stand: the Minimum Wage actively encourages mechanization and roboticization. The more the Minimum Wage rises, the more encouraged employers will be to dump humans altogether.

When robotics hit the labor scene in a big way, the political Left is going to be rendered irrelevant in yet another sector of the economy. As robotic technology improves and becomes cheaper, more minimum wage workers will be threatened. The workers who needed the Minimum Wage to protect them from lower bidders for their job are going to get hoisted by their own petard.

Politicians may try to ban robotics in the workplace, ostensibly to “make work”. This would never work. While the USA would flounder along with overpaid government-mandated human employees, foreign countries with less of a tyrannical streak would dominate the world economy through efficient use of robotics and mechanization. A team of 10 men in the USA would be sub-par compared to a robot in China doing the same job for no pay beyond maintenance costs.

I don’t actually think politicians would try to ban robots. History has shown us an important lesson: trying to fight the spread of technology is a losing battle. Many politicians may be manipulative sociopaths, but they aren’t usually stupid.

CONCLUSION

Minimum Wage laws are not going to be rescinded. The Left becomes hysterical at any mention of the idea, and a lot of voters really are deluded into thinking that the government can legislate wealth into existence. In all likelihood, liberals will continue to push for a higher minimum wage, onward and upward. This is going to encourage roboticization.

The Minimum Wage for California will be capping out at $15 in the year 2020. By then, I expect to start seeing fast food restaurants staffed almost entirely by machines. These places will dominate the industry. I could be wrong, if technology does not develop quickly enough; but the rising minimum wage will certainly be a sufficient incentive for business owners.

So, count on this prediction: robots will become more common in the workplace. If you want reliable employment, learn how to maintain robots.

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