Jason Riley on the minimum wage

See New Laws May Make 2023 a Year of Unintended Consequences. Excerpts:

"Last week, a judge in California placed a temporary hold on a law that would raise the state minimum wage for fast-food workers as high as $22 an hour. The law was signed by Democratic Gov. Gavin Newsom last summer and set to be implemented on Jan. 1. But a petition to overturn it by voter referendum in 2024 has gathered more than a million signatures, which prompted the restraining order.

For now, California is getting a reprieve, but the other 26 states that are hiking the minimum wage this year probably won’t be so lucky. Proponents of these measures say they reduce poverty, but history shows that they are more likely to reduce employment—particularly among younger, less experienced workers—by making job seekers too costly to hire.

Even people who keep their jobs after a minimum-wage increase often find themselves assigned fewer hours of work and thus making less money than they might have expected. That was the finding of a University of Washington analysis after Seattle hiked its minimum wage in 2015. “Increased wages,” the study concluded, “were offset by modest reductions in employment and hours, thereby limiting the extent to which higher wages directly translated into higher average earnings.”

Perhaps a bigger problem with using mandatory wage floors to address poverty is the dearth of people who earn minimum wage. In 2020, only 1.5% of all hourly workers earned the federal minimum wage, according to the U.S. Bureau of Labor Statistics. State minimum wages can be higher, but the portion of workers earning the state minimum is also quite small. In 2015, it was less than 8%. In other words, there simply aren’t enough people earning minimum wages to drive poverty trends. Moreover, most working people who are poor already earn higher than the minimum, and most of the people who do take home a minimum wage live in households that are well above the poverty line. What impoverished people need most are jobs, and minimum-wage increases that hamper job creation do more harm than good."