Throughout the presidential campaign, the Democrats have been touting an increase in the minimum wage as a great policy that helps low-income Americans. However, we are finally starting to see the effects on prices when wages are artificially increased.
The Federalist Papers Project reports that after Washington residents voted to increase the minimum wage to $13.50 an hour, they saw jumps in child care costs across the board.
Heidi Perry, director of a Washington Childcare Company, explained that many parents were not happy with the idea of the cost increase. “I think there was a little bit of sticker shock. I had a lot of parents who walked into the office last night or this morning and say ‘am I reading this right?’ And I said yes you are.”
However, this should come as a shock to no one, since Republicans have been making the argument all along that an artificial increase in the minimum wage will result in businesses passing the increased cost of labor onto their customers.
The whole idea of raising the minimum wage is actually more economically harmful to low-income people, because the market will adjust to the wage increases.
On a basic level, the cost of the labor to create any good is built into the price, so if you increase the cost to make the item, you likely increase the cost of the item itself.
Then, if you do what the left wants and make low-cost labor more expensive, you increase prices on the low price goods that low-income families rely on.
Further, you create the possibility that businesses will not be able to afford as many employees as they had before, resulting in lay offs for those who work minimum wage.
Also, it makes the job market for low-income earners more competitive, as there are even less jobs available and more people competing for them. On a global economics scale, minimum wage increases also incentivize companies to outsource jobs overseas, because they can hire three employees for the cost of hiring one in the US.
This example in Washington should be a wake-up call to politicians like Bernie Sanders. You can’t just stand at a pulpit and say you want to increase the minimum wage so your economically challenged supporters think they are getting a handout.
You have to actually look at examples like what is happening right now in Washington. Minimum wage increases and other socialist economic policies do not work.