Senate Committee Passes Rural Job Destruction Act

Now Hiring sign in Centreville, Va. Image source: Patch.com

Are you kidding me? The Senate Labor and Commerce Committee just voted to increase Virginia’s minimum wage from $7.25 an hour to $15 an hour by 2021. The measure won the backing of Senate Majority Leader Tommy Norment, R-James City County, and Sen. Frank Wagner, R-Virginia Beach. Now, it appears, even many Republicans believe that prosperity can be enacted by a legislative wave of the wand.

Tram Nguyen, co-executive director of New Virginia Majority, summed up the argument for boosting the minimum wage: “We need to give working people opportunities, so that they don’t have to make the hard choice between food on the table or a roof over their head.”

Liberals feel sorry for people in poverty, so they mandate higher wages. My only question: Why stop at $15 an hour? Why settle for a mere “living” wage? Why not $30 an hour? Why not mandate a comfortable middle-class existence for everyone? 

The reason that people aren’t clamoring for a $30 minimum wage is that even liberals understand that hiking the minimum wage so far above what an employee can command in the labor market would trigger a massive loss of jobs. Employers will not pay $30 for an employee who delivers only $7.25 in value. By settling for a $15 minimum wage, the maestros who would fine-tune the economy are gambling that the number of displaced jobs will be relatively few in number, and that the gains in higher wages will outweigh the wages lost through lost jobs.

Ironically, the market is lifting wages without the need for government intervention. Thanks to strong economic growth nationally, wages are increasing — and the strongest gains are among lower-income workers. Wrote the Wall Street Journal back in October:

The lowest-paid Americans saw weekly earnings grow more than 5% in the second quarter from a year earlier, more than the national median gain of 1.7% for all workers, according to a quarterly survey of households produced by the Labor Department.

In places like Northern Virginia, where the overall wage level is so high that hardly anyone is paid the minimum wage to begin with, a $15 minimum wage might barely be noticed. The differential between a $15 minimum wage and the market wage would be relatively small, hence less destructive to job creation.

However, a $15 minimum wage would create a huge gap between mandated wages and market wages in low-wage, low cost-of-living regions of the state, especially rural areas like Southwest Virginia and Southside Virginia. The effect would be disastrous.

I can’t begin to imagine why Norment and Wagner voted in favor of the bill. Maybe they figured it would be defeated in a full Senate vote… or go nowhere in the Republican-dominated House of Delegates. Maybe they’re running scared of an impending Democratic majority and think that adopting Democratic priorities will avert the inevitable loss of power. Or maybe Republican leadership is just ignorant of basic economics. I don’t know.

Whatever the reason, I’ve got to wonder: If Republicans can’t embrace market-based policies, what’s the point in voting for Republicans? You might as well go full Social Justice Warrior and vote for Democrats.