How are businesses supposed to adjust to 6-8% increased labor costs every year for four years?

That’s not a question addressed by anybody whom Edward Fitzpatrick quotes in his Boston Globe article on the march of a $15 minimum wage bill in the General Assembly.  Although, Working Families Party director Georgia Hollister Isman does say that “small businesses should feel good that people will have money in their pockets.”

Here are the steps of this “path” to $15:

  • For 2022, the minimum wage increases from $11.50 to $12.25, which is a 6.5% increase.
  • For 2023, it increases to $13, which is a 6.1% increase.
  • For 2024, it increases to $14, which is a 7.7% increase.
  • For 2025, it increases to $15, which is a 7.1% increase.

After that, does anybody believe the progressives in the state government will declare their work done and move on to other issues?  That’s doubtful.

Democrat Representative David Morales attacks a strawman argument by claiming that other states that have moved in this direction have not seen “a spike in unemployment,” but such arguments show a contempt for real concerns — even reality.  Businesses hire people because their work has value, so they won’t simply slam on the brakes.  They’ll try to make do.  Meanwhile, on the other side of the “unemployment” equation, the sorts of people who look for minimum wage jobs (especially teenagers) might just decide not to work if no jobs are available, so they won’t count as “unemployed.”

Hollister Isman touts the fact that businesses “will have time to plan for the increases,” so what are they likely to do?  Well, to some degree, they’ll raise prices, driving up inflation and making everybody’s dollar less valuable in the area. They might lay people off, but perhaps more often, they just won’t refill positions when minimum-wage workers (who tend to be transitory) move on.  Then they’ll offload tasks onto higher-paid employees, effectively lowering the value of their jobs.  They’ll also let tasks slide, like filing and organizing, affecting everybody’s work environment and productivity.

The running theme in all of these comes together in the probability that they just won’t expand, at least as quickly as they otherwise would have.  It won’t appear worthwhile to hire, and so opportunities to grow won’t arise.  The exception to that is if they automate, in which case more jobs may evaporate.

The advocates for these sorts of policies look around incredulously and proclaim that we won’t see any negative effects from their mandates, but the truth is that we’re already seeing them.  They are the weights that drag our economy down and drive people who want to be productive elsewhere.  Then the same advocates turn around and sell those who remain on government dependency.

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3 years ago

[…] Rhode Island’s elected officials’ piling on the burden of mandatory increases in the cost of labor for the next few years just when Rhode Island […]

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