First Victims of the Minimum Wage

You can't write this stuff enough.  No sooner does the once-great State of California pass a $15/hour minimum wage -- or even threaten to do so (it starts now and ramps up to $15 in 2022) -- and the jobs start fleeing the state.  First we have the garment manufacturers, led by American Apparel, the largest clothing maker in LA, which has dumped 500 jobs and suggested that the remaining 4,000 positions in the city it has may go overseas.

A garment that cost $5.00 to make, a company official said, now costs $6.50.  "My customers won't pay that", he said.  Why should they?  There is cheaper manufacturing to be had throughout the world; in fact, I was a bit surprised that any company was making clothing in Los Angeles in any volume.  Aren't you?

This is called "voting with your feet.",  With the full force of the minimum wage law not even arriving for six more years, the immediacy of the actions of this particular firm (and the others mentioned in the LA Times article as threatening or planning to follow suit) are worth looking at -- and asking candidates about.

I'm not going to challenge the assertion of American Apparel, and I'm not going to challenge their decision to cut jobs and possibly outsource all their manufacturing.  If they had wanted to have done that, they clearly could have done so a year ago.  Obviously they prefer to make clothing in California, because they are making clothing in California.  Just as obviously, they don't want to move and they don't want to cut jobs here.

All this was done because the government of the state, in its infinite wisdom, decided to make the ability to operate as a thriving business in the state more expensive and more difficult.  Whatever did they expect to happen?  You add costs by making labor more costly than its value, and businesses will simply respond in the best fiduciary interest of its shareholders.

In this case, that means 500 Californians who were taxpayers are now going to be looking for work, and that is the start of, as the article says, the exodus.  They might have some really nice weather there, but Lord, does the climate stink.

I don't know when liberals will ever actually look at the actual outcomes of the wonderful good deeds they keep trying to do, that invariably make the situation worse.  They never stick around the site long enough to do what we call in my profession "continual process improvement"; they just "do" and then move on to mess something else up with their good intentions.

But this -- this whole LA thing and the minimum wage effect and the lost jobs and the lost tax revenue -- needs to be hugely at the top of debates from this point on.  The questions have to be pointed.  Not "What do you say to the person who lost her job", but this one "Premise: the minimum wage appears to have failed people immediately in its implementation in California and it looks like the job losses will continue.  What exactly would you do -- will you do -- to reverse the damage the minimum wage law has done to employees and prevent it from happening again?"

Something like that.

We all knew, at least those who consider long-term implications of actions, that job losses would follow a significant hike in the minimum wage.  This instance is a classic response by businesses that are forced to operate differently, when the rules change and their costs are hiked with zero added value for that extra money.

I want all the candidates to be grilled on that and I think the press has a real obligation to get the candidates to answer the questions about it directly.

Because at this moment, it looks like the law, the one that Hillary Clinton and Bernie Sanders are fighting for the right to say they thought of it first, is a royal disaster.  It certainly is for the 500 people no longer to be employed.

Perhaps Hillary has staff positions in her campaign for them.  If she isn't in prison by then.

Copyright 2016 by Robert Sutton
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