Board Chair Janice Hahn and Supervisor Lindsey P. Horvath have ginned up a minimum-wage hike for hotel and theme park employees working at sites in unincorporated parts of the county. The idea was introduced at the Board’s Aug. 8 meeting and will be considered as a motion on Sept. 12. Should the motion pass, “county staff will draft the Tourism Worker Retention Minimum Wage Ordinance in 45 days,” says the Los Angeles Times, then “supervisors would then vote on the ordinance.” No word on when it would go into effect, should it pass.
Once in effect, the minimum wage of $16.90 an hour for covered workers will be boosted to $25 an hour. From there, it will rise to $30 an hour by 2028, when Los Angeles hosts the Summer Olympics.
According to the Times, Hahn believes too many employers aren’t paying their workers enough. Which is entirely her right. We’re all entitled to our opinions. But Hahn is in a unique position to codify her opinions, to turn her preferences into law. Is this a legitimate function of elected office?
U.S. Supreme Court Chief Justice John Marshall wrote in 1819’s McCulloch v. Maryland decision that the power to tax is the power to destroy. But there’s a less-well-known clause that follows: “The power to destroy may defeat and render useless the power to create.”
Minimum-wage hikes are a tax in the sense that they are a “heavy demand.” So let’s explore their ability to “render useless the power” that businesses need to create.
When strapped down with higher employment costs that don’t increase productivity, businesses, especially small ones, are put in the position of rolling back plans to expand, hire, and innovate. Ambition has to be put on hold. Bonus programs might be suspended or eliminated altogether. Previously smooth-running projects can be interrupted. The downside of taking risks increases.
At the same time, minimum-wage hikes do force companies to be creative, but not in ways that are economically beneficial. Businesses forced to increase their pay have to figure out how: to spread around a limited number of work hours among their employees; decide which job or jobs have to be eliminated to keep the books balanced; adopt a different model for pricing goods and services; and to be inventive in ways that will allow them to keep their doors open but at the same time stall business advancement.
Pay raises should be determined privately. When policymakers get involved, and they’ve shown themselves to be unable to mind their own business, the economic distortions they cause are harmful. There ought to be a law that would specifically prevent them from meddling in private affairs.
Kerry Jackson is a fellow with the Center for California Reform at the Pacific Research Institute.
