When Arnold Schwarzenegger ran in the recall election, he ran as a candidate who would stand up
to the special interest groups that have been dominant in Sacramento. These special interests, largely employee unions, are pressing hard for an increase in the amount of the mandate on California employers on the minimum hourly wage that they can pay an employee. Emboldened by the defeat of the Governor’s reform package, they are pushing hard for such an increase to be a part of the Governor’s legislative agenda.
As a well-schooled libertarian, I know that Arnold Schwarzenegger is a big admirer of Nobel laureate economist Milton Friedman. This is what Friedman says about the minimum wage:
"Minimum wage laws cost jobs. Employers cut out, or mechanize, jobs that are not worth the minimum rate to them. Worst affected are the inexperienced young people, those with poor skills, and minorities."
Anthony Archie, of the Pacific Research Institute, says in a column published today, entitled, Minimum Wage is Maximum Fallacy, that:
"The most well known distortion is the higher unemployment that results from minimum-wage laws. Setting the minimum wage above the level where employers and employees would have mutually agreed on labor services forces employers to cut back on the number of hires. This has been empirically documented in a half-century’s worth of economic research, most notably in studies on the fast-food industry. Beyond unemployment, the labor market is distorted in other, more indirect ways."
Archie closes his piece with this dire statement:
"Despite the ill effects of minimum-wage laws, politicians from both parties still pander to those who believe the laws help the poor. If politicians really want to help the poor they should implement the most logical and practical arrangement: free the labor market to match willing employers and employees."
Governor Schwarzenegger campaigned as someone who is more moderate on issues like abortion and gay rights, but who enthusiastically embraces a free-market approach to economic issues. A government mandate out of Sacramento requiring certain wages is socialism, and is counter to the message that Arnold Schwarzenegger brought to the people in his election.
Minimum wage laws ‘poll’ well with the public because it sounds like a good idea – of course,
everyone should be paid as much as possible! But ask the public about whether they like the idea that this mandate will be the proverbial straw that will cause some California businesses to move, or close altogether.
Milton Friedman has also said, "Underlying most arguments against the free market is a lack of belief in freedom itself."
Sometimes leadership means doing the right thing, not the popular thing. We hope the Governor will stick to his principles, and reject the calls for yet another fiscal mandate on California businesses, large and small in the form of mandates wages. Hopefully the Governor will continue to embrace freedom and free markets.
This entry was posted
on Wednesday, December 21st, 2005 at 12:00 am and is filed under Blog Posts.
