Mayor Philip Levine is making headlines by pushing to raise the minimum wage in Miami Beach by a whopping 65 percent, and last week the City Commission gave its preliminary approval to the proposal. Some speculate that it’s the mayor’s opening salvo in a bid for governor in 2018. But whether its politics or serious policy, Levine and commissioners should address some hard realities about this proposal.
First, it’s illegal. State law is very clear and says that a city “may not establish, mandate or otherwise require an employer to pay a minimum wage, other than a state or federal minimum wage.” The city’s attorneys argue that the Florida Constitution gives the city the power to set its own minimum wage, but that’s only if the state Legislature hasn’t preempted city legislation. The Legislature has, and this is not a close case.
Government officials are supposed to respect and enforce the rule of law. Instead of wasting tax dollars on a doomed legal fight, the city should focus on pro-growth policies that help residents move beyond minimum-wage jobs.
Second, as a businessman, the mayor knows how businesses respond to increased costs imposed by government: They either cut employees or increase prices. Both scenarios are bad news for Miami Beach.
On the jobs front, the nonpartisan Congressional Budget Office has predicted that raising the minimum wage nationally to $10.10 per hour would lead to significant job loss. The Miami Beach proposal is even higher, meaning the elimination of even more jobs in the city. The mayor should explain his mandate to those who will be forced out of the labor market; their wages will go from minimum to nothing. Teenagers, for example, often take minimum-wage jobs as their first step into the working world. These entry-level jobs teach them basic skills for the workplace. Price these teenagers out of the labor market and they lose this critical developmental opportunity, which has negative consequences when they later try to get higher-skill jobs after high school or college.
The other option for businesses in Miami Beach will be to pass the increased cost onto residents and tourists in the form of higher prices for goods and services. This high-cost city will become even less affordable for everyone, including the very people the mayor wants to help. The problem with government-controlled economies is that they often lead to unintended and unwanted results.
If the city’s leaders really want to advance the local workforce, they’d be better off supporting policies that create more jobs (like tax cuts and less red tape) and a better-skilled labor pool (like innovation and choice in education). Job growth leads to competition for workers, which results in wage increases through natural market forces. Indeed, over the last year in Florida, average real wages grew by 2.7 percent in the private sector and by nearly 4 percent in the leisure and hospitality industry. This happened not because of a government mandate, but because our economy has so many new jobs that there is competition for employees.
Mayor Levine should put his money where his mouth is. Before entering politics, he found great success in business in Miami Beach — a story that should be celebrated and emulated. One wonders, though, whether he was the beneficiary of a market his proposal would now close to others. Could his hospitality-and-tourism businesses and business partners have afforded the costs his proposal will now impose? Would his 1990 start-up company have survived if government had priced it out of the market? Mayor Levine found fortune in a market system that efficiently sets prices and rewards hard work and ingenuity. He should allow other small businesses and fledgling entrepreneurs in Miami Beach the same opportunity.
Jesse Panuccio is an attorney and the former Executive Director of the Florida Department of Economic Opportunity.