If you want to cause jobs losses, it turns out increasing the minimum wage is far more effective than even massive cuts to the federal budget.
Bowing to pressure from far-left progressives and labor activists, President Obama issued an executive order in February to increase the minimum wage for federal contractors from $7.25 an hour to $10.10. At the time, the President brushed off criticism that the minimum wage harms jobs, claiming, “It’s not going to depress the economy, it’ll boost the economy.”
Minimum wage zealot and Labor Secretary Thomas Perez claimed that the President’s order would not only increase pay for workers, but result in improved service for customers.
The White House was so confident that it claimed the mandate could be implemented using existing resources. According to Politico,
Obama’s executive order, which will go into effect Jan. 1, 2015, will not cost the federal government money because its contractors will become have more efficient [sic] employees if they are paid more, [Labor Secretary] Perez said. Government agencies will not increase funds allocated to contracts to absorb higher wages, he said, because the contractors will see better productivity from their workers to cover the costs.
If such logic sounds like wishful thinking, that’s because it is. The following month, The Military Times reported on the first casualties of Obama’s order: four fast food outlets operating on U.S. naval bases, including the McDonald’s at Puget Sound Naval Shipyard in Bremerton. An unnamed source told The Military Times that the closures were only “the tip of the iceberg.”
While the White House might be oblivious to the consequences, the military is not. In a recent letter to Perez, Deputy Assistant Secretary of the Navy for Military Manpower and Personnel Russell Beland requested that fast food operators be exempted from the President’s order.
Noting that the new wage structure puts business operators “in an impossible business dilemma,” Beland explained that the Navy exchange alone expects Obama’s order to result in the closure of 390 fast food concessions and the loss of nearly 6,000 jobs.
And as Paul Byron of The Washington Examiner points out, “that’s just for the Navy and Marines. The Army exchange system is much bigger, and including the Air Force, could affect as many as 10,000 more jobs.”
To put this in perspective, Obama’s wage decree has already killed more jobs than the entire $85 billion budget sequester of 2013 – not that this is hard to do.
A recent Government Accountability Office report could only find one federal employee who lost a job because of the sequester. During the debate over the Budget Control Act, politicians and other observers frequently forecast that the budget cuts would eliminate well over a million jobs. (Hat tip to WPC’s Jason Mercier).
None of this should come as a surprise. A nimble and competitive private sector is what fuels economic growth and ultimately sustains even government jobs, not a bloated and inefficient public-sector apparatus.
Hopefully cooler heads will prevail. A group of 40 lawmakers recently signed a letter to Perez urging him to make sure that military facilities are exempted from Obama’s wage order. Still, with the President eager to appease an increasingly militant progressive labor movement, don’t hold your breath.
