Did you know that intrusive government policies are making income inequality worse?
Government intervention in the economy is making the gap between rich and poor a lot worse.
In the last four decades, income inequality in America has increased significantly, according to the Federal Reserve Bank. And, not surprisingly, the worst state is California.
This growing gap between rich and poor is an unintended consequence, resulting from government economic policies and taxes, regulations and favoritism.
The result is greater unemployment, an increase in “involuntary part-time workers,” and lower or suppressed wages.
For example, employers have turned to part-timers instead of full-time workers because of the artificially higher costs caused by government policies favoring frivolous lawsuits, Obamacare, minimum wage hikes, excessive regulations and rules, and more.
Some workers are socially engineered into worrying about exceeding income thresholds for government social service benefits and transfer payments — and so deliberately work LESS.
The minimum wage has increased automation, replacing jobs and has redefined the workplace on who to hire.
For example, Seattle’s minimum wage hike to $15 was sold as a corrective to the gap between rich and poor. But the results were predictable. It raised the cost of hiring employees, reduced many workers’ net income through less hours of work and, basically, hurt the people it was supposed to help.
The lesson from Seattle is this: Forcing businesses to pay more hurts the very people that minimum wage hikes are intended to help.
No doubt Washington, D.C., is destined to suffer the same fate.
The District last year joined California, Washington state and New York City when it approved a $15 minimum wage law.
The city’s chief financial officer warned that up to 1,200 jobs could be lost by 2020 if the new policy is instated. Job losses would rise to 2,500 by 2026.
Mayor Muriel Bowser, shows no signs of rethinking her stand to double the current federal standard of $7.25 an hour. The District’s hourly minimum is now $11.50 an hour, which will increase by 70 cents annually until it reaches $15 in 2020.
The law of supply and demand should not be manipulated by city councils, no matter how well-meaning they think they are. Or state governments. Or the federal government.
When government gets involved in the free marketplace that is America, trouble follows.
That’s why Ronald Reagan reminded us that the most terrifying words in the English language are: “I’m from the government and I’m here to help you.”
Watch this powerful 2-minute video on how Seattle’s $15 an hour wage has hurt the city.
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