Minnesota’s Economic News — W/E 7/1/22
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Empirical evidence shows that the minimum wage is bad policy which disproportionately harms those it is intended to help. And, where a supposed labor shortage in Minnesota is driving wages up, it is irrelevant public policy. Even so, Saint Paul’s newly elected mayor, Melvin Carter, seems intent on pressing ahead with a $15 per hour minimum wage.
Telling people what to do is easy, doing it is hard
“To me, there’s a strong voter-imposed, community-imposed urgency around getting this done, and very specifically around the $15 minimum wage, that I think we have to respond to” he said recently. Where are the employers in this? Where are the employees? Surely, as consenting adults, they are able to enter into any working relationship they see fit without voters and the community getting involved?
Apparently not. But it is the employers and employees who will have to take whatever Mayor Carter decrees and make it work. It won’t be him sat up late at night in the back room of a restaurant, pouring over the books and wondering how to make payroll. His job is the easy one, to tell you what to do. The employers have the hard job, figuring out how to do it. As the Star Tribune reports,
Sean O’Byrne, who has owned Great Waters Brewing Company since it opened in 1997, said he’s worried about keeping his businesses afloat if the $15 minimum wage passes without a tip credit — and he isn’t convinced conversations with policymakers will make a difference.
“You can talk all you want — they have to listen,” O’Byrne said. “And right now, politicians aren’t in a mood to listen. They think they know what’s right for business.”
Indeed they do. When settling on a wage, an employer will have in mind some estimate of how much a worker will add to turnover and that will form the maximum they will offer. A worker, on the other hand, will have some knowledge of the alternative wages on offer. How can a politician, like Mayor Carter, lacking the knowledge that either the employer or employee has, presume to second guess and arbitrarily declare what wages they are allowed to contract at?
They can’t. But then they bear none of the cost of their actions. That falls on the employers and employees. That being so, might it not be better to leave the decision to them in the first place?
John Phelan is an economist at Center of the American Experiment.