A tale of two (liberal) cities

San Franciscans voted last week to forbid anyone in their city from taking a job that pays less than $8.50 per hour. Some of those in low-skill jobs at lower wages might be able to keep their jobs, but only if they can convince their employers to raise their wages. Many such workers, though, will now be downsized. Also, some planned hires for low-wage positions simply will not take place.

That’s the truth about San Francisco’s new minimum wage law, passed by popular referendum on the November 4 mayoral ballot. But don’t look to the Associated Press for the truth. Their uncredited staff writer, in covering the initiative’s success, serves up this gem: “San Francisco is one of the most expensive places to live–and voters there are trying to make it a little more affordable.”

The AP article and its author are proof that the public education system has totally failed us. Minimum wage laws cannot make any place, commodity or item “more affordable.” What they can do is make life more expensive for the poor and keep society’s most vulnerable workers–the uneducated and the unskilled–consistently unemployed.

Why, minimum wage laws could almost be a plot by rich, racist Republicans.

Unemployment

My friend Steven, a plumber in Washington D.C., spits at the mention of George W. Bush and insists that U.S. intervention in Afghanistan is all about oil. Nonetheless, he understands economics a lot better than your average AP reporter, and that’s why he does not have an apprentice. Beginning in July 2003, Montgomery County, Md. began requiring public contractors to pay their employees at least $10.50 per hour.

Steven wants to get county contracts, but he knows that no teenager–no skill-less worker of any age–is worth $10.50. So Steven works alone, and some 17-year-old kid somewhere in the Washington area is out of the job right now, thanks to the minimum wage law. As Walter Williams likes to say, if the minimum wage is $10.50 per hour, and you can’t produce $10.50 worth of value by working for an hour, then you can’t find work. (Don’t worry, kid, you can still join a gang and sell crack for a living–that pays more than $10.50 per hour.)

In San Francisco, it’s even worse, since thousands of illegal aliens will be ready to work for a fraction of this inflated new minimum wage, undercutting those who legitimately seek work. Don’t expect the cops to intervene, either–San Francisco law forbids them to ask illegals about their immigration status.

Higher Wages = Higher Costs = Higher Prices

Not only do minimum wage laws–especially high ones like San Francisco’s–cause unemployment, they also cause the cost of living to rise. Some employers, of course, will actually begin paying their workers $8.50 or more–the intended consequence of the ballot initiative. Don’t we have a happy ending here–a fairer and more just society?

Well, only if you think it’s just to make poor people pay more for essentials. That’s because the employers who actually do raise their wages–the “nice guys”–will have to make up for the higher wages by increasing the prices they charge for high volume goods and services.

Take a grocer, for example, who employs 50 full-time workers on all shifts. Assume that he makes no layoffs because of the new law. If he raises his employees’ wages from $5.15 (the current federal minimum) to $8.50, it will cost him $1,340 per day, which comes out to about $489,000 per year. Now, if you think that this half million-dollar loss will simply float off into the atmosphere, you probably write for the Associated Press. That money comes from somewhere: customers will pick it up in the form of slightly higher prices, probably on high-volume items–like milk and eggs, for example.

Liberals generally decry sales taxes on such food items as “regressive.” But in this case they have no problem robbing the poor to give to the poor. San Francisco’s unskilled janitors and factory workers will be paying the higher wage of unskilled grocers and house-cleaners. They will also be paying it in equal share with the rich and famous–who do not necessarily spend more on groceries.

So thanks to this new law, the poor will pay more than the rich, the unskilled will lack jobs, and the youth will be without opportunity. Oh, there must be an evil, rich Republican somewhere in San Francisco gloating over this right now!

Common Sense Cambridge

It’s no surprise San Franciscans would do something like this–just last month 80% of them voted to retain the worst governor in modern memory. But all is not lost, not even in the City of Fruits and Nuts. Another hotbed of mindless Leftism actually found some common sense last week.

Cambridge, Mass. can definitely give San Francisco a run for its money when it comes to being lost in a liberal time warp. To this day the home of Harvard still sports decaying electric-powered buses–monuments to the age of utopian environmentalist dreams and the drugs that made such dreams possible. Both of Cambridge’s two major independent political parties make Howard Dean look like Ronald Reagan. (I hear they are having a huge controversy right now over whether a mere 10% or a more generous 25% of the spots on the police force should be set aside for lesbian officers.)

But at least the town seems to have learned its lesson about government intervention in pricing. The same day San Franciscans were voting to put low-wage workers out of work, voters in Cambridge trounced a home-rule petition on their ballot to reinstate rent-control laws that were wisely abolished in a 1999 statewide ballot measure.

Cambridgeans had learned from past experience that maximum rents–like minimum wages–are counterproductive. Rent-control deters the development of new housing units, ensuring that demand continues to outstrip supply and thus preventing prices from falling. It also discourages regular maintenance by landlords, thus keeping units artificially squalid.

San Francisco could also learn its lesson about government price controls some day. After all, if they can do it in Cambridge…

David Freddoso writes for Human Events.