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April 10, 2015

Oakland’s Minimum Wage Law Has Failed

The $12.25-an-hour minimum wage in Oakland, California, is killing the city’s small businesses. The Employment Policies Institute polled 223 businesses in the city, many of which had 15 or fewer employees. It found a quarter of the businesses say they may have to shut down; half hiked their prices; and a third fired employees or cut their hours. It’s because Oakland forgot Economics 101. Wages have to grow, but they can’t be raised, lowered or otherwise manipulated by the government. The question of how much someone should be paid — like the questions of how much to charge, where to take your business — is a concern of a free economy. Furthermore, The Economist says rising wages are key to the next step of economic growth for America. There are good signs that workers will start to take home a bit more bacon, as Walmart and McDonald’s recently announced wage increases for their employees. But Oakland is feeling an economic crunch right now because it artificially tried to raise wages. It worked about as well as any other attempt from government to control the economy. More…

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