Scott Shackford: Consequences of economic intervention

2013-06-13 14:43:19


The minimum wage bill's sponsor, Assemblyman Luis Alejo, D-Salinas, explained why he feels the state must act: "The last time the minimum wage was increased, gas was $3.25 a gallon in California," Alejo said. "I don't know about you, but I haven't seen gas prices at that level in a long time."

And maybe he never will, given that California has the highest gas taxes in the country and will be sticking drivers with another 3.5 cent-per-gallon increase come July. It's quite remarkable how oblivious Alejo is about the reason why gasoline is so expensive in this state. Including the looming 3.5 cent-a-gallon fuel tax increase, the California Tax Foundation reports, "California's combined local, state and federal gasoline taxes total 70.6 cents per gallon, the highest in the nation."


Plenty of economically savvy folks have previously written in the Register about how minimum wage increases actually kill low wage jobs, so I won't get into that redundancy. But there's an additional potential economic harm hidden in California's employment laws when it comes to salaried employees. In California, in order to classify an employee as an "exempt" salaried worker (exempt from the state's rather inflexible overtime laws and other officious monitoring rules) that employee must earn at least twice the minimum wage, among other requirements.

If this minimum wage increase is passed and reaches its maximum in 2016, employers will have to pay salaried workers at least $18.50 an hour in order to exempt them from the tiresome wage-slave laws and grant some flexibility.


Alejo is far from alone in his lack of grasp of the less obvious consequences of the state's intervention in the economy. A quick online search will tell him where he could find gas at that $3.25 a gallon price or cheaper – Texas.

Scott Shackford is associate editor of Reason 24/7 at

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