Raise the minimum wage, line Donald Sterling’s pockets

Reihan Salaam ties together the topics of Donald Sterling, land-use regulation, and the minimum wage. He argues that Sterling, a notorious slum lord, “has profited enormously from the tendency of liberal cities in California to limit housing permits.” Why? Because “these limits help constrain the supply of low-rent housing, which in turn forces low-income renters to spend a high (and rising) proportion of their incomes on rent.”

Why then do liberal cities limit housing permits? For one thing, they don’t want congestion. But Salaam contends that “there are all kinds of ingenious strategies for reducing congestion through the use of congestion pricing.”

The real motive. Salaam suggests, is aesthetic. Liberal elites don’t want to sacrifice their scenic views to new housing developments.

The upshot is, as noted above, a shortage of low-rent housing that forces up the prices low-income renters pay to men like Donald Sterling.

According to Salaam, liberal cities typically respond by pushing for living wage ordinances and local minimum wage laws. One of their main arguments in favor of this agenda is that full-time low-wage workers scarcely earn enough to afford rent.

Minimum wage laws drive up employer labor costs and thus result in fewer employment opportunities. Moreover, putting that powerful objection to one side, low-skilled workers who are able to obtain extra income through a minimum wage hike will end up paying some of that extra income to the likes of Sterling. After all, low-wage workers in the service sector will still have to live somewhere.

Salaam concludes:

It turns out that for affluent liberal voters living in picturesque cities, it is CHEAP to back minimum wage hikes that might reduce employment levels for the less-skilled or raise prices for the kind of people who frequent quick-service restaurants and other establishments that employ low-wage workers, while it is VERY DEAR to back policies that will increase housing supply.

(Emphasis added)


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