If you're in a trendy, happening coastal city these days, you know that the progressive cause of the moment is raising the minimum wage to $15 per hour. And thus the poor will magically be raised up to prosperity, paid for entirely by evil exploitative employers who up until now have been woefully underpaying their workers. Seattle led the way in the higher minimum wage movement in 2014 by raising its minimum to $15, followed closely by San Francisco. And now New York, not about to be embarrassed by being behind the curve on trendy progressivism, is in the process of enacting its own $15 minimum wage. As reported by the New York Post on Friday (uh-oh, that was April Fools' Day; but the news conference was on the previous day, March 31, and I think it actually happened) Governor Cuomo has announced that he is "near" a budget agreement with state lawmakers that includes a $15 minimum wage for our state too.
But here's the funny thing: even though each of these trendy progressive jurisdictions claims to have enacted a $15 minimum wage, none of the new wage requirements has actually gone into effect. Instead, all of them are scheduled for multi-year phase-ins, with full effectiveness of the $15 level at least several years away in each case. According to the website of the mayor of Seattle here, its $15 minimum first takes effect on January 1, 2017, but only for employers with 500 or more employees who provide no medical insurance. Large employers who provide medical insurance get longer, and smaller employers get longer still, so that many employers get until 2021 to reach the $15 level. The San Francisco $15 minimum, passed by voters in a referendum in November 2014, only kicks in on July 1, 2018. And in New York, the proposal is for a complicated patchwork of mandates varying by size of employer, location in the state, and maybe other factors. The earliest $15 minimum will be in New York City in 2018. Even the very prosperous immediate suburban counties will get at least two additional years, and further upstate, even longer.
OK, here's my question: If enacting a minimum wage just redistributes free money from evil, exploitative employers at no real cost to anyone, why not make it effective immediately? What are you afraid of? To put it bluntly, is there a down side here, or isn't there? And if there is a down side, how does putting the increase off by two years (or four, or six) make that down side any less?
The fact that the enacted increases in the very most progressive jurisdictions in the country will only take place several years out is a clear admission that even the most ardent proponents of the increases understand that of course there is a down side. And in addition, they also admit there is a downside when they draw the line on the increase at $15. If there were no downside, then the minimum should be at least $20. I mean $30. I mean $100. Or whatever.
And if there is a down side, on whom does it fall? On the 20-year-old white college kid from a prosperous family whose parents can call in connections to get him a job even at the new raised minimum? Or on the 20-year-old non-college-attending black kid whose parents have no connections to call in? If you don't think the answer to those questions is completely obvious, you might consider the February 20, 2016 editorial from the New York Times titled "The Crisis Of Minority Unemployment." Citing a study from something called the Great Cities Institute of the University of Illinois at Chicago, the Times points out that in recent years in New York and Los Angeles, close to 30% of black men aged 20 - 24 have been out of both work and school; and in Chicago the figure has been closer to 50%. And those figures are before any recently-enacted minimum wage increases. With a high enough minimum we could get those young-black-male unemployment rates to close to 100%! The Times, of course, is an advocate of the $15 minimum wage. Don't worry; according to the Times, we could mitigate the effect of the higher minimum wage with employer subsidies paid for with free federal money from the infinite credit card.
By delaying the effective date of the minimum wage increase, I think the proponents are trying to make it so the public will not perceive the cause and effect between the change in the law and the increase in minority unemployment many years later.
But the $15 minimum wage has the potential to greatly enhance the visible contrast between the high-tax high-spend high-regulation "blue model" jurisdictions, and the low-tax, low-spend low-regulation "red model" jurisdictions. So far, you really need to be a follower of the statistics to understand how much more successful places like Florida and Texas have been in recent years than places like New York and Illinois. To all appearances, for New York, the City is doing rather well, and living here you don't realize that upstate is rapidly hollowing out and overall the population of the state has stagnated for decades. Similarly in Illinois, the Loop and North Side of Chicago seem just fine, while no visitor would ever travel down to the dozens of square miles of abandonment on the South Side. Losing population? If you hang out where everybody hangs out, it's imperceptible to the eye.
But if places that enact the $15 minimum suddenly have black youth unemployment and idleness rates 10 and 20 and even 30 percent higher than other places that don't, that will be very hard not to notice. Will it happen? The obvious prediction is that it will. As noted here several months ago, in Puerto Rico, where the federal minimum wage even at $7.25 per hour is around 70% of the median wage, the labor force participation rate is a full 20 percent below the rate on the mainland (42% versus 62%). Why will the result be any different in New York, San Francisco, or Seattle?