Remember the “Fight for $15?” Well, that’s old news, at least as far as Sen. Bernie Sanders is concerned. The Vermont socialist just introduced legislation that would raise the federal minimum wage to $17.
“It is time to pass a new livable wage,” Sanders said. “As a result of inflation, $15 an hour would be over $17 today.”
Sen. Bernie Sanders (I-VT), ahead of presenting a bill to the Senate Health Committee to raise the federal minimum wage to $17 an hour:
"It doesn't matter whether you're a Democrat, Republican, or independent — people support and understand that workers need a living wage." pic.twitter.com/ZujlyENIE4
— The Recount (@therecount) May 4, 2023
The first thing to point out here is the hilariously depressing lack of self-awareness in this policy evolution. Progressive policies of trillions in funded government spending led to runaway inflation, so now we need even more progressive policies than before. Because that makes sense.
But more importantly, a $17 minimum wage would not help the struggling people that Bernie and his allies claim it would help. In fact, many of them would find themselves priced out of a job.
The nonpartisan Congressional Budget Office estimates that a $15/hour federal minimum wage would destroy up to 3.7 million jobs. With a $17/hour minimum wage, we can safely assume the damage would be even worse!
It’s not actually hard to understand why.
If the minimum one can pay an hourly employee is $17/hour, then it is effectively illegal to employ anyone who does not produce $17 an hour in value. A franchise considering expanding its hours, for example, could stand to gain $15 an hour in revenue from adding a new employee. If he’s able to pay them $12 or $13 an hour, that’s a profitable win-win and everyone is better off. But if he’s legally mandated to give them $17 an hour, he simply won’t offer them that job at all—because doing so wouldn’t be profitable.
So you can expect layoffs and hours getting cut. But we also need to think of all the potentially mutually beneficial jobs that will never come into existence under such a high minimum wage.
Still, even those who do keep their jobs still might not be better off. Why? Well, one likely outcome is that some of the costs incurred from a minimum wage hike get ‘passed on’ to consumers via higher prices.
One study famously found that McDonald’s, for example, passed along just about 100% of its increased costs from minimum wage hikes through increased menu prices. So, many workers whose paychecks do go up numerically might not actually have a higher standard of living when the complete picture is taken into account.
Bernie’s plan would have many downsides and relatively little upside. But we don’t simply have to accept stagnant wages in lieu of a minimum wage increase.
Real comprehensive wages can and do rise completely independent of mandatory minimum wages when the economy is growing and inflation is low. But if we want to get back to that kind of thriving economy we need to embrace fewer Bernie-Sanders-style economic policies—not more.