Bernie Sanders is the bottomless cup of bad ideas. He keeps refilling it. Take his latest venti, a law that says everybody gets to work thirty-two hours for forty hours pay. That’s a magical 25 percent pay increase. His next trick is to pull free steak dinners out of a hat.
What do you think would actually happen if such Bernie’s law were passed, enforced and found constitutional? (None of those would actually happen, of course.) The immediate effects would be another 25 percent price increase for labor-intensive products, a huge burden on low-income consumers and an additional incentive to replace more expensive workers with machines and computers.
The substitution of capital for labor is an on-going process, but Bernie would supercharge the effort and create incentives for innovators to come up with products, machines and computer programs that performed those tasks at lower costs. The more expensive the tasks, the greater incentive to figure out ways to save money on them.
Bernie’s Magic Pay Raise would create a major incentive to hire people off-the-books (for the true market price) or to have them work extra hours that way. It would create new incentives for employers to hire workers as individual subcontractors, rather than wage workers. And, of course, it would lead to tens of thousands of court cases where employees were sued for violating the new wage rules. Since the wages would be above market rates (otherwise there would be no need for a mandate), the yearly increases would lag inflation so that real wages would gradually return to market rates.
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Author: Ruth King
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