If you want to help low-income workers, don’t raise the minimum wage. Reduce illegal immigration.
Unfortunately, Nevada Democrats are taking the opposite approach.
There’s a bipartisan desire to boost workers’ wages. Creating jobs that bring people out of poverty has a host of societal benefits. Folks with jobs are less likely to rely on welfare or other social services. On average, students whose families live in poverty do worse than other students. People in poor households are more likely to be crime victims. Poverty is associated with reduced life expectancy.
The Democrats’ solution is straightforward. Impose a government mandate. On Wednesday, an Assembly committee heard a constitutional amendment that would raise Nevada’s minimum wage to $12 an hour in 2024. If passed, it would go before voters in 2022. In 2019, the Legislature enacted a bill gradually raising the minimum wage to a similar level by 2024.
The problem is that there are consequences to public-sector edicts. Some businesses can’t afford to pay higher wages and close down. Some raise prices. Others invest in technology that replaces workers. For instance, Marriott is now testing automated kiosks that replace desk clerks. Don’t be surprised to see that technology on the Strip one day.
Those are unintended consequences, but they’re very real. On the national level, the Congressional Budget Office estimates that a $15 an hour minimum wage would cost the country 1.4 million jobs by 2025.
It’s important to realize a few things about the minimum wage. Most minimum-wage employees work only part time. More than 60 percent are in school. Two-thirds of minimum-wage workers receive a pay increase within their first year. The average income of their families is more than $65,000 a year.
Each of those facts should make someone think twice about raising the minimum wage. Working in a minimum-wage job is a chance to improve one’s skills and demonstrate responsibility. That’s the pathway to a higher-paying job.
Here’s one more interesting fact. In 2019, less than 2 percent of workers earned the federal minimum wage or less. Some of that is because states have higher minimum wages than the federal government. But another reason is that — before the coronavirus — the economy was on fire. The unemployment rate in February 2020 was 3.5 percent.
To attract workers, companies had to raise wages — no government mandate required. That was happening, too. In 2019, the lowest-paid workers saw a 4.5 percent increase in pay. That was more than highest-pay workers.
It’s supply and demand.
Now, think about illegal immigrants. On Wednesday, Democrats passed a bill out of committee on a party-line vote to make Nevada a sanctuary state.
More illegal immigrants means more low-skilled workers. A greater supply of low-skilled workers reduces wages for all low-skilled workers. Supply and demand. Government only compounds that problem if the minimum wage rises above the wage floor set by the market.
Immigration is a federal responsibility. But when Nevada Democrats roll out the red carpet to welcome illegal immigrants, they’re undercutting the earning potential of the low-skilled Nevadans they claim need a minimum wage increase.