Economics of Liberty

Oakland Raises Minimum Wage, Destroys Childcare Market

The progressive left has long promulgated the idea of raising minimum wage at the national level in order to ‘respond’ to the challenging economy for the common worker. The problem, of course, as any economics 101 course at your local community college will teach you, is that the rise in wages necessitates a rise in costs; not the other way around.

Yet liberals, the purported statistical intellectual superiors to their conservative counterparts, somehow cannot seem to wrap their giant brains around the basics of how markets work.

In the liberal utopia, the minimum wage would be as high as necessary for the common workers to afford whatever they may want, and absolutely nothing about the subtending economy would change. The problem for the leftists who stand at the forefront of this proposal is this pesky thing called reality, and it bends for no one — not even the most guileless of the well-intentioned.

Case-in-point: Oakland, California. This community, in the best intentions, currently has a minimum wage of $12.25 per hour for its workers, and as a result is causing certain job occupations and industries to implode from within — namely, those surrounding Oakland’s childcare system. According to the San Francisco Chronicle, those workers who have ‘benefitted’ from said wage raises (even a negative liberal article about minimum wage can’t blatantly be negative about the minimum wage) who work in childcare are now finding themselves unable to work to reap said ‘benefits’ in the first place:

““We’re scrambling to find ways to keep the doors open,” said Capt. Dan Williams, Alameda County coordinator of the Salvation Army. He says the added payroll costs of providing workers with a $12.25-an-hour wage have put his organization’s Booth Memorial Child Development Center and family shelter $146,000 over budget, which is “quite a bit for a facility that was barely making it as it was.”

If the Salvation Army can’t scrounge up that money by writing grants and finding donors, it might have to cut some of its 63 child care slots. A number of other day care centers face the same predicament.

Child care centers operate on razor-thin margins — thinner, even, than those of the restaurant industry — and many are lucky to wind up in the black at the end of the year. A restaurant can raise prices to meet the new cost of doing business, but child care operations have limited flexibility.”

The Economic Policy Journal states that the fact that such a policy walked an entire community into this completely avoidable crisis is evidence that there are some “very confused people roaming around the Bay Area,” and that they are not crony capitalists so much as they are “useful idiots.”

But what of the everyday citizens of Oakland who are ignorant of the externalities (as the say in the field of economics) caused by such pathos-laden public policy? Do they deserve to continue to be misled by the politicians they vote in to support them? Is liberal economic policy ever going to be unveiled as the gigantic jackass in the room that it is when problems like those we now see in Oakland arise? If those in power continue to have their way, it would seem not.

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