op-ed

Bernie’s Jobs Scheme Is A Disastrous Backdoor Minimum Wage Hike

Bernie Sanders Reuters/Carlo Allegri

The latest from the far left wing of the Democratic Party is a jobs proposal from Bernie Sanders. It’s a harebrained jobs scheme that is light on details. But, essentially, the plan would provide a $15-an-hour government job — plus health benefits — for anybody who wants to work.

Sanders’s jobs plan comes at a particularly odd time when it really isn’t necessary. The unemployment rate is 4.1 percent, the lowest since 2001, so it begs the question: Why is Sen. Sanders so concerned about unemployment when there are other issues to worry about? Even if the rate hovered at 10 percent, as it did in 2009, creating $15-per-hour government jobs for the unemployed would be a colossal failure for many reasons.

First, such a plan would be prohibitively expensive. There were approximately 5.3 million full-time unemployed people in March 2018. Assuming each person is paid $15 an hour, a 40-hour a week job would cost about $31,000 per year per worker (not including the health benefits Bernie promises). Thus, the low end of the cost estimate would be $165 billion a year, plus perhaps another 20 to 30 percent of salary equivalent for the cost of benefits. Also, factor in workers described by the Bureau of Labor Statistics as “discouraged” and those “marginally attached to the labor force” who are not included in the official number of unemployed. Then, the costs go even higher.

While the argument could be made that these government jobs may reduce dependence on food stamps and Medicaid, Sanders has not indicated that this plan would all-out replace such programs. Even if it did, a massive government jobs program would do irreparable damage to the private sector with wage rates that do not reflect the market price of labor.

Think about it: Many low-skilled private sector jobs do not pay $15 an hour, and for good reason. In industries such as food service and retail, many workers are willing to do the jobs for less. It is called supply and demand. If a worker does not want to earn minimum wage for a lifetime, there are plenty of opportunities to acquire education and skills training and receive higher pay in a different job. However, with Bernie’s plan, the private sector would have to compete with the government for lower-skilled workers. The left may cheer about this — arguing that it would force private firms to raise their wages to attract workers. More likely, small service-sector and retail businesses that could not afford to raise wages would simply do what they have already done under an increased statutory state minimum wage: raise prices, reduce employment (or go out of business entirely) or resort to automation. In essence, the Bernie plan would crowd out productive private sector jobs with government jobs.

It gets worse. Think about the long-term effects of having millions of new government workers. What would they all do? Infrastructure repair touted by politicians only goes so far. Voters are typically not keen on the idea of taxpayer-funded government employees sitting around and twiddling their thumbs. Inevitably, the administration who signs off on the Bernie plan (or if Bernie himself should someday become president) would want to provide “productive” work for these millions, and the only way to do that would be to create new federal bureaucracies to manage the citizenry. Not to mention these $15-an-hour thumb-twiddlers would be unionized. The demand for wage hikes and more benefits would soon follow.

The bottom line is this: Just because a politician announces a jobs plan does not mean it would actually create jobs of economy-growing value. The devil is in the details. Bernie’s plan belongs in the eternal dumpster fire of jobs schemes gone bad.

Pamela Villarreal is the associate director for the Colloquium for the Advancement of Free-enterprise Education at the University of Texas at Dallas. Her opinion is her own and does not necessarily reflect the views of the University.


The views and opinions expressed in this commentary are those of the author and do not reflect the official position of The Daily Caller.