Question 2: Minimum Wage Hurts Those It’s Designed to Help
Perhaps no issue better serves as a litmus test of economic literacy (or illiteracy) than minimum wage. However, at this point the debate is theatrics – a regularly scheduled ritual of the same frayed talking points that occurs every few years.
“If we could just raise the minimum wage, we could give everyone a living wage and eliminate poverty,” or so the argument goes. As if the last 30-something combined federal and state minimum wage hikes didn’t occur.
It’s been the same fight for a century in the U.S. and yet, the economic statists never once admit that the minimum wage has failed. They inevitably return every so often asking for another increase. And virtually every time it’s put to a vote of the people it passes. Why? Because this debate has long ceased being about how things are.
It would be nice if there was a chance that Question 2 on next week’s ballot could be defeated, but it’s almost certain to pass. On this issue the public doesn’t care about reality.
You can explain to the average voter that over the past 30-plus years a vast majority of studies have found that increasing the minimum wage causes companies to reduce full-time employment opportunities.
As a result, minimum wage hikes prevent low-skilled workers from gaining crucial on-the-job experience, making it more difficult for young people to enter the job market and hurting economic mobility. Yet, most Nevadans will still vote for it anyway.
This isn’t about facts or figures: this is about feelings, and particularly the feeling we’re doing something to help people and reduce poverty.
It’s a form of faux charity, but, hey, everyone’s heart is in the right place and that’s what matters, right?
The fact is, we need to change how we discuss the minimum wage. This doesn’t mean stop talking about price floors or any other Econ 101 stuff, but we need to start putting everything in the lens of poverty alleviation and reduction while providing strong alternatives that will improve job prospects and economic mobility.
Each time the minimum wage comes up we need to start pivoting to occupational licensing reform.
Right now, we have more people in Nevada unemployed or underemployed than earning minimum wage. At the same time, we have the second-worst regulatory regime in the nation, which is preventing people from earning more or entering new fields that pay far more than minimum wage.
We need to be making the case that increasing opportunity by moving forward on licensing reform, rather than boosting the minimum wage, is how we truly help people climb the economic ladder.
Free market capitalism has proven time and again to be the only way to alleviate poverty and increase prosperity en masse over the long haul, so let’s own it.
Lastly, there’s something most people don’t understand about Question 2: while it is technically about the minimum wage, it is more about health care. Yes, it does add constitutional language about a $12 per hour minimum wage, but that was already going to happen following the passage of AB456 in 2019.
What Question 2 will really do is eliminate the two-tiered system that only Nevada uses for the minimum wage. Currently, if you offer health care to your employees, you can get a $1 discount on the minimum wage.
If Question 2 passes, some businesses currently offering extras such as health insurance will undoubtedly cut benefits, while others will eliminate jobs. Some may do both.
Employers don’t take such drastic action because they’re heartless. In notoriously low-margin businesses such as restaurants and grocery stores, employers can’t offset mandated wage increases by boosting prices. They must scale back costs or they’ll end up losing money.
Ultimately, if Question 2 passes it will mean fewer opportunities for entry-level workers and Nevadans seeking to return to the workplace, and that does nothing to benefit those at the bottom of the wage ladder.