…John Bel Edwards is actually going to publicly tout a hopeless bill for one.
The governor hopes to sway politicians into approving an increase in the state’s minimum wage.
The plan was outlined Tuesday as part of Governor John Bel Edwards’ plans for the upcoming regular meeting of state lawmakers at the capitol in downtown Baton Rouge. The session, known as the Regular Session, starts Monday.
The governor is working with New Orleans state Senator Troy Carter (D) to bring minimum wage up to $8.50 over a two year period.
“There hasn’t been an increase to the minimum wage since 2009 but the cost of goods has increased by 35 percent, which impacts families, communities and employers,” said Louisiana Workforce Commission Executive Director Ava Dejoie. “It’s essential we work together to raise the minimum wage to strengthen families, grow our economy and build a stronger workforce.”
Louisiana’s labor force participation rate as of January 2017 was 59.8 percent, which was quite a bit off the national number of 62.9 percent. The February unemployment rate was 5.8 percent, which was the first time since April 2014 that it’s been under six percent. The oil industry has taken it on the chin, and its struggles have dragged Louisiana’s economy into the muck. This, to be kind, is not a great time to impose new costs on Louisiana businesses.
And it’s not like the history of attempting to increase the minimum wage is a particularly good one. It just so happens that yesterday, former Hardee’s and Carls, Jr. CEO Andy Puzder, who for a time was Donald Trump’s Labor Secretary nominee, wrote a fairly persuasive op-ed at the Wall Street Journal telling some uncomfortable truths about minimum wage hikes and just how well they work…
Entry-level jobs matter—and you don’t have to take my word for it. In a speech last week on workforce development in low-income communities, Federal Reserve Chair Janet Yellen said that “it is crucial for younger workers to establish a solid connection to employment early in their work lives.”
Unfortunately, government policies are destroying entry-level jobs by giving businesses an incentive to automate at an accelerated pace. In a survey released last month, the publication Nation’s Restaurant News asked 319 restaurant operators to name their biggest challenge for 2017. Nearly a quarter of them, 24%, said rising minimum wages.
It’s no surprise that restaurants are rolling out the robots. McDonald’s said last November that it would install self-order kiosks in all 14,000 of its U.S. restaurants. Wendy’s announced in February it would add kiosks at about 1,000 locations to “appeal to younger customers and reduce labor costs.”
The trend toward automation is particularly pronounced in areas where the local minimum wage is high. Eatsa, a 21st-century version of the automat, now lists seven locations in four cities, each of which will be subject to a $15 minimum wage within the next 36 months.
Taking automation to the next step, Miso Robotics and the owner of CaliBurger announced in March they have developed a robotic arm, called Flippy, that can turn burgers and place them on buns. CaliBurger plans to install them over the next two years in 50 restaurants world-wide.
By encouraging automation, cities that significantly raise the minimum wage destroy opportunities for the least-skilled workers. In 2015 a scholar at the Federal Reserve Bank of San Francisco released a paper summarizing the available research on this effect. “The most credible conclusion,” he wrote, “is a higher minimum wage results in some job loss for the least-skilled workers—with possibly larger adverse effects than earlier research suggested.”
Guess who takes it on the chin most when stupid governments impose a minimum wage beyond what the market will bear? A hint: people who look an awful lot like Troy Carter…
The loss of entry-level jobs also worsens racial disparities. In a 2011 report from the nonpartisan Employment Policies Institute, two university economists examined nearly 20 years of data containing 600,000 observations. They compared how each 10% increase in the minimum wage affected the employment of young males without a high-school diploma. For whites, the drop was 2.5%. For blacks, it was 6.5%.
These are jobs America cannot afford to lose. In 2014 nearly 40% of black men age 20 to 24 in Chicago and almost 30% in New York and Los Angeles were neither working nor in school, according to a report last year from the Great Cities Institute. For white men, it was about 10%. Nationally, February’s unemployment rate among white males age 16 to 19 was 14.1%; for young black males it was 24.1%.
We can’t express how desperately this state needs to put its people to work. Louisiana ranks at or near the bottom of so many sociological categories for lots of reasons, but one of them seems to be pervasive – namely, that not enough Louisianans are in the workforce and acquiring the skills to get ahead in it. That’s why we have too many poor people, it’s why we incarcerate too many people, it’s why we have too many kids without a father in the home (there is a huge correlation between financially self-sufficient males and marriage rates) and it’s why we rank so poorly in rates of things like health, auto and life insurance coverage.
You don’t fix any of these problems by pulling up the economic ladder. You’ll give a small raise to people making minimum wage but you won’t add any value to the work they’re performing for their employers, and as such there will be (1) fewer opportunities for work and (2) less incentive for minimum wage workers to acquire the skills to get jobs which pay better than minimum wage.
This is a stupid bill and it has zero chance of passage in the legislature. For Edwards to publicly support it makes no sense other than that he’s pandering to the national Democrat Party in hopes that it will pour resources his way when he comes up for re-election in 2019 – but the business community in this state has even more reason to take him down as he continues attempting to destroy the state’s economy with obnoxious, socialistic policies.