Bad timing

Why cost jobs now?

THE STORY was above-the-fold important. That is, in Friday’s Business section, the editors put the story at the top of the page, above where the paper usually folds.

The nut graph: “Thursday’s report reflects a U.S. job market that is still suffering from the pandemic, with hiring having weakened for six straight months. It is a key reason why President Joe Biden is pushing Congress to enact a $1.9 trillion economic rescue program, on top of a $900 billion federal aid package that was approved late last year.”

And strangely, on the same day, the papers were full of another story: The Biden administration wants to raise the federal minimum wage to $15 an hour. You see the problem.

The president is telling reporters that a federal minimum wage hike to $15 “will lift many low-wage workers out of poverty,” according to The Wall Street Journal. But others say such a hike will have the opposite effect.

Businesses would have several choices should the federal government demand they pay low-level employees higher salaries: First, the business could just eat the cost. More likely, the business would either raise prices or not hire as many employees. Or even trim down the number of people on the payroll altogether.

But the Biden administration doesn’t seem to believe that:

“Mr. Biden endorses a plan to more than double the wage in steps over four years, noting that at $15 an hour, a job could support a family of four and it wouldn’t live in poverty.”

Really? What if businesses—retail, restaurants, others—simply don’t employ as many people? A $15-an-hour job does nobody any good if they don’t have it. And if other businesses have to raise prices to pay for these raises, then the price of everything goes up, and $15 doesn’t buy what it once did.

So we’ll have to raise the minimum wage again to keep up with inflation. (For example, today that minimum wage employee, and the rest of us, can get a burger and fries for less than $7 most places. What will the price be if every employee at the burger joint makes at least $15 an hour? And this reality applies to more than burgers.)

The numbers say the pandemic is still with us; more people are being vaccinated, but this nation isn’t out of the covid-19 woods yet. Small businesses—especially restaurants and bars and retail outlets—have been pushed to the edge. Some have gone over that edge and have shut their doors.

For those still open, if barely, why add the financial pressure of a $15 minimum wage now? It would seem not a good idea to price businesses out of their markets at any time, but seems especially a bad idea today.

Again, from The Journal: “The nonpartisan Congressional Budget Office found in a 2019 study that raising the federal minimum wage to $15 an hour by 2025 could cost 1.3 million American jobs. The same study found the higher level could boost the pay of about 27 million workers and lift 1.3 million Americans out of poverty.”

You’ll notice the number 1.3 million was mentioned twice in the above paragraph: For every person who gets a raise into another tax bracket, another person would go jobless. That doesn’t sound especially progressive.

IT IS true that Walmart pays its associates more than the minimum wage, and other companies such as Target and Amazon have made the news in the last year by raising pay to at least $15 an hour. But those private companies are making those decisions on their own. And they can afford it. Can the owners of your favorite diner do the same? Should they be forced to?

Some of our friends on the left say a higher minimum wage could help lower the costs of some public assistance programs. But we wonder how. Especially if for every person who gets a raise, another is laid off.

When it comes to the minimum wage, and our opposition to it, there is always this thought experiment: If raising the minimum wage to $11 (once upon a time) or $13.50 or $15 is a good thing and generally helpful to the country, then why not raise it to $25 or $30 or more? Answer: Because that would cause inflation and hurt businesses, and eventually, workers.

So one wonders why it’s okay to only hurt businesses and, eventually, workers just a little bit.

And why we’d do this during a pandemic.