Negotiations continue in Washington as top Democrats push for the passage of a federal $15 minimum wage that would apply a one-size-fits-all rule to all 50 states and U.S. territories. But Texas Governor Greg Abbott is speaking out against the move and arguing that it's not right for his conservative state.
“Small businesses are the backbone of the Texas economy, along with a government-imposed $15 minimum wage would place a boot on the neck of smaller businesses struggling under the weight from the pandemic,” a spokesperson for Abbott said. The governor was responding to a new Congressional Budget Office report estimating that the imposition of a $15 minimum wage would eliminate 1.4 million U.S. jobs.
Pushing the Minimum Wage Hike
Democrats are pushing the minimum wage hike in hopes of helping workers struggling amid the COVID-19 pandemic and crushing government lockdowns.
\”Even before the COVID-19 pandemic, the $7.25 federal minimum wage was economically and morally indefensible,” Congressman Robert C. Scott, a Virginia Democrat on the House's Labor Committee, said.
“Now, the pandemic is highlighting the gross imbalance between your productivity of our nation's workers and the wages they are paid,\” he continued. \”Many from the essential workers who have braved a public health crisis to keep food on the table and care for our loved ones are still not paid enough to provide for themselves or their own families.”
Yet Texas currently operates underneath the federal $7.25 minimum wage, so an increase to mandating $15 an hour would be a drastic shift. And additional adjusting for Texas's cost of living, a $15 minimum wage is an effective minimum wage of $20.50.
One-Size-Fits-All Federal Policy
Just how drastic is that this? Well, in 2021, the median hourly wage in Texas was $17.06, and therefore the new minimum wage would be higher than what many, many Texans currently earn. The inevitable, predictable outcome is that many would lose their jobs.
This wouldn't only hurt already-struggling small businesses as Abbott notes, but also threaten the state's much-needed labor recovery in the wake of the sharpest economic contraction ever reported.
Unlike many U.S. states, Texas is already on the road to economic recovery, in large part because the Lone Star State largely eschewed an overzealous pandemic response.
New Bls data show that out of the 10 states with the largest population, only Texas saw an increasing labor force in December. Other states such as California and New York, that have kept their economies strangled with pandemic regulations, saw a 523,317 and 427,018 worker decline within their labor forces, respectively.
“Laboratories of Democracy”
Of course, pandemic policies are just one area where Texas is taking a markedly different approach than blue states. Additionally, it boasts zero state income taxes and a more hospitable business environment, while states like California are pushing to raise taxes and pass sweeping new regulations.
In one sense, this insurance policy competition is healthy.
When states try out different policy combinations, they serve, as Supreme Court Justice Louis Brandeis famously coined it, as \”laboratories of democracy.\” Voters can see what results each policy offers and vote with their feet depending on what they feel works and what doesn't.
It appears that Texas is winning the \”vote with your feet\” race. Per local news reports, \”86,164 people traded living in the Golden State for living in the Lone Star State in 2021, up 36.4 % from 2021 and more than any other state.\” Similarly, U-Haul data show a huge spike in one-way rentals from California to Texas.
But regardless of who is currently coming out on top, one-size-fits-all federal policies undermine this insurance policy competition between states. By forcing a $15 minimum wage on a conservative state like Texas that has consciously chosen not to implement one, the us government would be forcing Texans to live like Californians.
A Free Marketplace for Labor
And when it comes to minimum wage hikes, that's harmful indeed. Furthermore minimum wage hikes cause unemployment, but they close off the ladder of chance to low-skill employees like teenagers who are just getting started. Moreover, minimum wage will continue to grow result in higher prices for working class consumers and help big corporations like Amazon squash their mom-and-pop competitors.
A free market for labor, on the other hand, promotes employment and economic growth with time. Texas should be free to pursue this alternative even if other states are unwilling to abandon their minimum wage idealism. Just like California and New York ought to be left free to pursue their very own minimum wage policies, harmful as they may be to low-skilled workers and businesses.
In a nation as diverse because the U.S. and with such varied economic conditions across the nation, one-size-fits-all federal minimum wages are a recipe for political division and economic dysfunction.
Brad Polumbo is a libertarian-conservative journalist and Opinion Editor at the Foundation for Economic Education.