In the wake of the 2016 election, there is a heated debate over the issue of “fake news.” Unfortunately, the Albuquerque Journal fell prey to this trend. They ran an AP story on December 31 that was chock full of misleading and inaccurate information on the minimum wage.
Everything in the story including the headline implied that minimum wages are “all gain and no pain.” Wages go up and there are zero negatives associated with laws mandating higher basic wages. It is a wonder then that the story didn’t question why certain New Mexico politicians are ONLY trying to raise New Mexico’s minimum wage to either $15 or $8.45 an hour.
The reality is that economic theory, logic, research, and real world experience have all found minimum wages to do exactly what any other arbitrary government-mandated price increase would do: reduce demand for that item.
Here in New Mexico with the nation’s second-highest unemployment rate, our state minimum wage is “only” $7.50 an hour, but Santa Fe is at $10.91, Albuquerque is $8.00 an hour, and Las Cruces is at $9.20 an hour.
When someone suggests raising the minimum wage to $15 an hour, I express enthusiasm and tell them how great this will be for employers and consumers.
Since employers would have to lay off as many as one-third of their employees, they could upgrade their workforce by hiring and retaining only people who are actually worth $15 an hour. So they would not have to employ anyone without previous experience, who has had a brush with the law, or who has attendance or performance issues.
Higher labor costs also will make it more economical for businesses to replace labor with technology such as the self-service checkout kiosks they now have at Walmart. This will benefit consumers, because the combination of smarter employees and better technology will result in better customer service.
The only downside is that minimum-wage workers who don’t measure up, such as high-school dropouts and single parents, will lose their jobs and become career welfare recipients.
The entire minimum wage tempest in a teapot issue would go away if state legislatures simply passed laws that the federal minimum wage be increased each year by the increase in the CPI. Of course Dems would NEVER agree to such a law as they want the minimum wage to be an issue in each election. I’m surprised that legislatures with Republican majorities have not passed such legislation.
For those interested in the minimum wage issue, do some internet research. You will be surprised to learn many first world countries in Europe do NOT have minimum wage laws. How can they possibly survive?