So Much for Affordability as Minimum Wage Is Set To Rise

Albany Democrats — and Mayor-elect Zohran Mamdani — grouse about affordability, but ignore how their own policies are making New York City and state so expensive. Feature, say, the jump on January 1 in the minimum wage at New York City, to $17 an hour. The statewide floor will rise to $16 per hour. As recently as 2015, the state minimum wage was but $9 an hour. Artificially raising the price of labor, though, is no way to dial back the high cost of living. The trend is far from confined to the Empire State, with at least 22 states, per the New York Post, poised to raise the minimum wage in 2026. The largest jump will be in Hawaii, with an increase of $2 an hour, to $16. Even as red a state as Florida is set, after a voter-passed constitutional amendment, to raise its minimum wage to $15 an hour. Such policies defy economic logic — and breach the right of contract between employers and their staff.Feature what happened in 2024 when California raised to $20 an hour the minimum wage for fast-food restaurant employees. It was one of the biggest jumps in the minimum wage in American history, the Cato Institute reported. Even before the increase went into effect, per the Wall Street Journal, employees faced layoffs and cuts to their workdays. Cato in November found that the state’s attempt to set the price of labor had led to 18,000 lost jobs. Attempts to nudge the wages for low-skill labor like fast food or retail jobs often prompt employers to, say, replace cashiers with computerized kiosks — to the detriment of customer service. Consumers, too, bear the burden of these swollen salaries when employers pass the higher cost along by raising prices. Yet this only goes so far, as one McDonald’s franchise owner, Scott Rodrick, tells the Journal: “I can’t charge $20 for Happy Meals.”The job losses at the entry level of the work force are particularly damaging for youths looking for experience at the start of their careers, Dean Lyulkin, who heads a small-business loan company, Cardiff, tells the Post. “When entry-level labor becomes more expensive, the first thing that disappears is the opportunity to get hired and learn on the job,” Mr. Lyulkin avers. That logic is lost on leftists who look to the state to secure raises for their constituents. Before the regulatory depredations imposed under the New Deal, the Supreme Court was a bulwark against state attempts to meddle in the labor market by, say, requiring minimum wages, or capping the duration of the work day. There was no legal basis, the Nine held in 1905 in Lochner v. New York, “for interfering with the liberty of the person or the right of free contract, by determining the hours of labor, in the occupation of a baker.”In 1923, relying in part on Lochner, the high court, in Adkins v. Children’s Hospital of D.C., voided a minimum wage law. Opponents of the law called it “an unconstitutional interference with the freedom of contract” vouchsafed by “the due process clause of the Fifth Amendment,” the majority wrote. The Nine agreed, holding that “the right to contract about one’s affairs is a part of the liberty of the individual protected by this clause.”The Nine in Adkins called the unconstitutionality of a state-set minimum wage “settled by the decisions of this Court” and “no longer open to question.” That constitutional clarity fell by the wayside in 1937 when the Nine reversed course amid FDR’s threat to pack the court with more compliant justices. Nearly 90 years later, restoring the right of contract beckons as a way to burnish the Constitution — and resolve the crisis of affordability.

So Much for Affordability as Minimum Wage Is Set To Rise

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