Last November, Detroit voters desperate for good paying jobs approved a misguided law that will actually drive jobs out of the city instead of helping workers earn more.
Under the new "living wage" ordinance, employers who do significant business with city government must offer all workers a minimum wage of over $10.00 per hour. Employers who offer health benefits must pay over $8.00.
One Detroit economist estimates that the ordinance will destroy seven percent of the citys jobs, hurting poor and low-income workers the most. Why will this happen?
First, the ordinance makes it illegal for a worker to get or keep a job unless his employer agrees his skills are worth more than the government-mandated minimum wage. Job providers will either lay off or refuse to hire anyone else.
Second, the law applies to private charities including the Salvation Army, which serves thousands of needy Detroit citizens. The additional $1.5 million cost imposed on the Salvation Armys payroll will force it to fire employees or drastically slash services to the poor.
Good paying jobs are a desirable goal, but higher productivity and job experience, not government mandates, are the key to higher wages for Detroit workers.
For the Mackinac Center, this is Catherine Martin.