Just Economics has been campaigning for an increase in minimum wage. Just Ecomics calls this increase a living wage. They have successfully pushed their policy into local law. Now contractors for our city must also pay their employees a living wage of $11.35 an hour (without benefits). The policy advocacy on their website states, “It would not hurt contractors financially because the city would absorb the cost of paying its contractors a living wage.”
Why does this organization believe a person’s labor is more valuable than the market naturally bears? Does Just Economics support taking money from taxes to subsidize work? Who’s paying the taxes? Will the tax base be ready to support the city’s new budget? Will this make my rent go up?
These policies and laws will create more unemployment. Author and economist Henry Hazlitt wrote, “The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.” Labor is a scarcity like any other resource, and must be associated in with cost of the final good or service. The higher labor cost will increase the amount you pay for the good or service and will leave you with less money in your pocket, less savings. When a law exists that no one is to be paid less than $20 an hour, then no one whose services are not worth that amount to an employer will be employed. Is it worth an entrepreneur’s time to invest?
So much for my idea to open a smoothie shop. I am glad that Just Economics cares about a certain group’s standard of living, but it’s irresponsible to not understand the others.
— Aaron Watkins