04/05/2017

Minimum Wage Laws, Jobs, And The Vital Role Of Decentralization

Daniel J. Mitchell, International Liberty

The real world is like a cold shower for our friends on the left. Everywhere they look, there is evidence that jurisdictions with free markets and small government outperform places with big welfare states and lots of intervention.

That’s true when comparing nations. And it’s also true when comparing states. That must be a source of endless frustration an disappointment for statists.

Speaking of disappointed statists, the real world has led to more bad news. The left-wing Mayor of Baltimore campaigned in favor of a $15 minimum wage, but then decided to veto legislation to impose that mandate. The Wall Street Journalopines on this development.

Mayor Catherine Pugh, a Democrat, has rejected a bill that would raise the city’s minimum wage to $15 an hour by 2022. She did so even though she had campaigned in favor of raising the minimum wage, which shows that economic reality can be a powerful educator. She explained her change of heart by noting that raising the rate above the $8.75 an hour minimum that prevails in the rest of Maryland would send jobs and tax revenue out of Baltimore to surrounding counties. The increase would also have raised the city’s payroll costs by $116 million over the next four years when she’s already coping with a deficit of $130 million in the education budget.

The key thing to notice is that the Mayor recognized that the real-world impact of bad legislation is that economic activity would shrink in the city and expand outside the city.

Writing for Reason, Eric Boehm also points out that the Mayor was constrained by the fact neighboring jurisdictions weren’t making the same mistake.

Pugh said the bill would not be in the best interest of Baltimore’s 76,000 unemployed workers and would drive businesses out of the city to the surrounding counties. …Indeed. Raising the minimum wage would not solve Baltimore’s economic troubles, and would likely only add to them. While support for a $15 minimum wage has become something of a litmus test for progressive politicians, the true test of any politician should be whether he or she is willing to set aside campaign trail rhetoric that flies in the face of economic reality. Signing the bill would have made progressive pols and activists happy—one Baltimore city councilman called Pugh’s decision “beyond disappointing” and a minimum wage activist group said it would remind voters of Pugh’s “broken promise”—but there’s no honor in following through on a promise to do more damage to an already struggling city’s economy. Pugh’s decision to veto a $15 minimum wage bill isn’t disappointing in the least. More politicians should learn from her example of valuing economic reality over populist rhetoric.

The Mayor’s veto is good news, though it remains to be seen whether city legislators will muster enough votes for an override.

Regardless of what happens, notice that the Mayor didn’t do the right thing because she believed in economic liberty and freedom of contract. She also didn’t do the right thing because she recognized that higher minimum wage mandates would lead to more joblessness.

Instead, she felt compelled to do the right thing because of jurisdictional competition. She was forced to acknowledge that bad policy in her city would explicitly backfire since economic activity is mobile. She had to admit that there are no magic boats.

And this underscores why federalism and decentralization are vital features of a good system. Governments are more likely to do bad things when the costs can be imposed on an entire nation (or, even better from their perspective, the entire world). But when bad policy is localized, it becomes very hard to disguise the costs of bad policy.

And, as today’s column illustrates, decentralization stopped the Mayor of Baltimore from a bad policy that would hurt poorly skilled workers. Just as federalism stopped Vermont politicians from imposing a destructive single-payer health system.

Read full article



You May Also Like:

Can Trump Make America Grow Again? The Signs Are Hopeful Andy Puzder, Wall Street Journal

Even With President Trump’s Reductions, Welfare Spending Is Still Growing Oren Cass, City Journal

Who Will Stand Up For Civil Liberties? Alan M. Dershowitz, RealClearPolitics

Pop Singer Ariana Grande Offers To Pay For Funerals Of Manchester Bombing Victims Warner Todd Huston, Young Conservatives

First They Tore Down Confederate Monuments. Next They’ll Come For The Founders. Matt Walsh, The Blaze

That Pope ‘Frown’? More Fake News From Fake Media Nate Madden, Conservative Review

Teachers Get Into Brawl In Front Of Horrified Students [Watch] Lia Eustachewich, New York Post

Rasmussen Reports: President Trump’s Approval Ratings Hit 48% [Watch] Rasmussen Reports

Goodbye ISIS, Hello Losers Scott Adams’ Blog

Wasserman Schultz Threatened Police Chief For Gathering Evidence On Her IT Staffer’s Alleged Crimes [Watch] Luke Rosiak, Daily Caller

Directors Check Actors’ Social Media Before Casting To Make Sure They Don’t Support Trump Christian Toto, Hollywood in Toto

TV Actor Discovers His Inner 'Ron Swanson' After Trying To Start A Business Brittany Hunter, Foundation for Economic Education

Farmer Faces $2.8 Million Fine For Plowing His Own Field Elizabeth Harrington, Washington Free Beacon

Report: Premiums Doubled Once Obamacare Took Full Effect Robert Donachie, Daily Signal

The Free Market Is Diversity’s Best Friend Walter E. Williams, Townhall

Leftists Destroy Female Business Owners' Burrito Stand Because They're White Amanda Prestigiacomo, Daily Wire

The Dark Side Of Paid Parental Leave James Pethokoukis, American Enterprise Institute

For More go to the Home Page >>>

Search

Bookshelf

FreeMarket Central

Some titles recent, all recommended -

Special Video Feature

FreeMarket Central

Voices From The 2017 International Students For Liberty Conference

In Search Of History

Cambodia's Deadly Experiment

In the 1950s, students started gathering in Paris. They were reading Karl Marx. They were forming book clubs. They were trying to come up with a better version of society. One that moved away from the division of labor. One that moved away from the capitalism in the big cities that they so despised. ... One of those students would change his name to Pol Pot. He and his colleagues formed a new political party, a takeover in Cambodia. They called themsevles the Khmer Rouge. ... Under Pol Pot and the Khmer Rouge, one out of four people in that country died in less than four years. 

-- Matt Kibbe,

Shadow Stats Snapshot


FreeMarket Central

ShadowStats alternate economic indicators are based on the methodology of noted economist John Williams, specialist in government economic reporting.

  • Unemployment:
    FreeMarket Central BLS: 4.4%
    FreeMarket Central Shadow Stats: 22.1%
  • Inflation:
    FreeMarket Central April Year-to-Year: 2.20% (CPI-U*)
    FreeMarket Central Shadow Stats: 10.0%

*[cpi-u is the Bureau of Labor Statistics inflation rate for all urban consumers]