There’s a new story in the Los Angeles Times this week about how the new minimum wage hike is going to take a toll on the garment industry. According to the paper, California’s minimum wage, set to become $15 an hour by 2022, “could spur more garment makers to exit the state.” Instead of making it easier to find a job, the hike will make it almost impossible.
Los Angeles is already losing garment makers to Vietnam and China as big companies look for cheaper labor. This, of course, is seen as greed by the unions. But it’s usually survival that leads these companies to look for a better deal. If they stay in the U.S. and pay the kind of wages that Americans expect, they will have to jack up their prices beyond what Americans are willing to pay. That is an unsustainable situation, obviously.
The paper reports that American Apparel, the largest clothing manufacturer in Los Angeles, is thinking about moving some 500 jobs to another maker.
“The exodus has begun,” a former Forever 21 director named Sung Won Sohn told the L.A. Times. “The garment industry is gradually shrinking and that trend will likely continue.”
The voters who authorized this wage hike don’t understand the nature of the free market. You can’t go in there and muck around. You have to let the market determine where wages are set. Outsourced labor allows companies to keep their prices lower than they could if they had to compete on American soil. That’s why some Republicans are beginning to rethink NAFTA and other free trade agreements that have hurt the U.S. manufacturing industry.
But that’s a separate issue that we can examine in due time. For now, raising the minimum wage as a way of off-setting those trade agreements…that’s just not going to work. We will see a new exodus in manufacturing. Anything that can be made overseas will be made overseas. As for jobs that can be done by a robot, well, a minimum wage hike will only hurry their demise.
According to Hillary Clinton and Bernie Sanders, we can just wave a magic wand, jack up the national minimum wage, and suddenly everyone will be better off. In reality, they will crush the American economy, make it nearly impossible for entry-level workers without college degrees to find employment, and make prices higher in all industries and all sectors. They are doubling down on the very problems that are making the economy rough riding today. And it will have a devastating impact.