On election day, the voters of Florida overwhelmingly decided to increase the state’s minimum wage from $8.56 per hour to $15 per hour over the next six years. Despite President Trump winning Florida 51% to 48%, over 60% of voters chose to grant politicians more control over wages. This decision further distorts an increasingly government-controlled economy in the US.
No longer on top
In 2016, the ‘Freedom In The 50 States Project’ ranked Florida as the #1 most free state in the US. The study calculated each state’s score based on 23 factors, and gave them each an overall score, and then ranked them in order. The site highlights Florida’s #1 score on economic freedom as a reason for their top rank. As soon as they update the study (which they generally do every two years) we can expect Florida’s rank to drop by at least a few spots.
What is wrong with minimum wage laws?
We have addressed this innocent and seemingly reasonable question in many articles, videos, and podcasts. Firstly, no wages should be dictated by anyone other than the two parties involved (the employer and the employee). Adults should have total freedom in trading their labor for wages, as long as it is a voluntary contract. Secondly, politicians should not be granted control over the most foundational part of our economy. In fact, the government (politicians) has only one job: Protect the natural rights of people. And natural rights are life, liberty, and property. A high-paying job is not a right, and it certainly cannot be guaranteed by a politician without hurting others and largely distorting the economy.
What fallout should we expect?
As we have mentioned many times before, when politicians make it a crime for a person to work for less than a certain amount (or a crime for an entrepreneur to pay less than a certain amount), there are consequences. When employees can no longer work for the $9/hour that the market has determined to be their value, they simply become unemployable. If you only produce $8 worth of value each hour, employers cannot afford to pay you $9/hour. It is simple arithmetic. So, the first consequence is a decrease in jobs for the lowest level of earners.
On the employer side, now that they must spend considerably more money on payroll, they must either cut staff, work their staff much harder, cut benefits, cut spending elsewhere in the business budget (equipment, maintenance, etc.) or increase the price of their products and/or services. I was recently in a socialist state and I noticed that my coffee was much more expensive than it was at the same franchise store in my home state of New Hampshire. And then I remembered that the business owner is forced by politicians and law enforcement to spend much more money on employees (not to mention licensing fees, regulatory compliance, taxes, and other socialist expenditures).
Would abolishing the minimum wage hurt the poor?
The best way for the poor to get out of poverty and into the middle class is to allow them to access the free market. The minimum wage in New Hampshire (NH has none, but the federal minimum wage is $7.25/hour) does not cause the state to be the poorest in the US. In fact, the ‘Live Free or Die’ state has the highest median household income in the whole US! But how many poor people live in New Hampshire? How many people in New Hampshire are stuck earning only $7.25 per hour? According to the NH Fiscal Policy Institute, 8,000 workers in New Hampshire (less than 1% of the population) earn the minimum wage, and we could safely assume that many, if not most, of them are teenagers with no work experience or skills. Currently, New Hampshire has the lowest poverty rate in the US.
If Florida voters wish to continue attracting workers to their state, they should reconsider their latest restriction on the free market. Smart workers and employers know that the best climate for prosperity is a free market. And the only thing that politicians can do to help individuals prosper is to get out of the damn way.
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