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Monday, August 22, 2016

Dear Hillbama, $15 Federal Minimum Wage Equals 7 Million Job Losses

James Sherk, of The Heritage Foundation, recently took a look at what impact a $15 federally-mandated minimum wage might have on employment levels in each of the 50 states. Unsurprisingly, the study concludes that the impact would be substantial with approximately 7mm jobs lost, or roughly 6% of current full-time jobs in this country. As we pointed out before, imposing artificial floors on wages really only serves to improve returns on capital investment by businesses resulting in permanent job losses and higher unemployment in the long-term (see “As Robots Replace Farm Workers, Why Payback Is A Bitch”). A point that Sherk confirms:

Companies hire workers when the additional earnings their labor creates exceeds the cost of employing them. Starting wages of $15.00 per hour mean full-time employees must create at least $38,700 a year in value for their employers (including wages, employer payroll taxes, and Obamacare-mandate penalties).[4] Such a high hurdle would make it much harder for less-experienced and less-skilled workers to find full-time jobs. Many of these workers are not yet productive enough to create that much value for their employers and businesses will not hire them at a loss.

Consequently, many businesses might respond to a $15 mandate by eliminating positions, cutting hours, and looking for new ways to implement labor-saving technology. Some companies might have to face shutting down or leaving America entirely to cope with the additional expenses.

This process has already begun in California. Shortly after Los Angeles raised its city minimum wage to $15 per hour, American Apparel eliminated 500 clothing manufacturing jobs in the city. The Los Angeles Times reports the company planned to relocate those jobs within California. After California raised minimum starting wages statewide, however, American Apparel began examining options to move production outside California.

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4 comments:

  1. You people still don't get it do you??? That is the WHOLE GOD DAMN POINT OF ALL OF THIS, the whole point is to make everyone broke on purpose... Why do you think they raise taxes instead of cut them? Why do you think they wastefully spend money???

    No wonder the politicians can get away with anything, even lie right to your face and 3 like a gold fish, 3 minutes later, der-which way did she go george-der-der more der... That means you are stupid to put it simply...

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  2. From where do these people think that the money will come to cover these wages. And note that the edicts come without any sort of guidance on how to manage what is in many cases doubling wages -- just do it and the Devil take his toll on business and, again, the shrinking middle class.

    ReplyDelete
  3. AND so The carrot and stick distance gets no shorter, just further for everyone

    ReplyDelete
  4. companies are posting record profits at the expense of their underpaid employees who are already on welfare.
    that's where the money will come from.

    ReplyDelete

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