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Richard Rider

UC Berkeley institutes $15 minimum wage, then fires 500 employees

Rather than waiting for the new California $15 state minimum wage law to be phased in over five years, UC Berkeley decided to accelerate its own minimum wage to $15, starting this coming September (2016).

Naturally the Progressives celebrated. Shortly after making that decision, the administration announced the layoff of 500 workers, as the school now has a $150 million deficit to contend with.

Can someone explain to me how a organization bleeding a $150 million annual deficit planned to pay for a 50% minimum wage increase? Do they teach Economics 101 at Berkeley? 

Sadly, the answer is that like all colleges, Berkeley has an Economic Department. They have very expensive and self-important Econ professors.  But they don’t teach common sense economics.  Far from it.

“Common sense” may sound like a silly, nebulous and biased criteria.  To a degree it is.  That being said, here’s an example:  To demonstrate the level of abysmal ignorance in Econ Departments while educating my audience, one of my favorite questions to Econ students is this:  “On a dollar’s worth of sales, what do you think is the average percent of profit for a corporation?”

Blank stares are followed by guesses that reflect the thinking of the general public — 20% and up.  One survey found that on average the public thinks corporations make 36% profit on a dollar’s worth of sales. The correct answer is 6.5%.  I’ve written about this widely held misconception before:

I’ve always made the case that — given what is taught in HIGH SCHOOL and most college economics classes (propaganda from progressives) — we’d be better off if we BANNED the “teaching” of economics in public schools.

I say that based on 30+ years of being the guest speaker in HUNDREDS of civics and economics classes in about three dozen high schools in San Diego County, plus speaking to scores of college classes (and doing numerous debates) in local institutions of learning.  

The astonishing liberal bias permeating college economics departments (and indeed entire universities!) was not always the case — and certainly never to the level found today. I well remember one college debate in the last decade where I faced a moderate and a liberal Economics professor. The “moderate” was a big advocate for European socialism, while the liberal proudly announced whenever he spoke that he was a doctrinaire Marxist — his description, not mine. The funny part (not really) was that the Marxist was the HEAD of the Economics Department (Grossmont CC).  

So why did they invite me for this debate? Because they couldn’t find a free market academic anywhere to do the “panel discussion.”  Free market economists (or even more centrist economists) have been pretty much expunged from college campuses, as the liberal professor selection committees pick only fellow liberal professors to join the faculty.

In the “good old days,” there were a handful of professors who actually favored diversity.  Diversity of OPINION.  In days gone by, often I was invited to speak to classes by OPPONENTS of free markets and true capitalism — they wanted their students to get broader exposure to differing viewpoints.  

What an archaic idea.  That thinking is all but nonexistent today on campuses.

As my speaking appearances dwindled, I used to make the point to my audiences that its quite likely that I would be the ONLY limited government voice they would hear on campus in their entire college experience. Often the professors would nod in agreement — even though they were usually liberals!

Over the years, my speaking engagements faded out. I haven’t been invited to speak on a college campus for almost a decade. 

Sometimes I wistfully think that it would be better if every Econ student would instead just read a simple “bathroom book” like ECONOMICS IN ONE LESSON by free market economist Henry Hazlitt. “Bathroom book”? Yes, because no chapter is longer than 6 pages. 

Sit down economics!


But, as usual, I digress.  Here’s the Berkeley minimum wage story. “Enjoy.”


UC Berkeley announced that it was laying off 500 employees just a week after California Gov. Jerry Brown approved a $15 minimum wage. (AP)



UC Berkeley Touts $15 Minimum Wage Law, Then Fires Hundreds Of Workers After It Passes

  • 4/21/2016

UC Berkeley Touts $15 Minimum Wage Law, Then Fires Hundreds Of Workers After It Passes4/21/2016

Labor Markets: Hundreds of employees at the University of California at Berkeley are getting schooled in basic economics, as the $15 minimum wage just cost them their jobs. Too bad liberal elites “fighting for $15” don’t get it.

A week after California Gov. Jerry Brown signed the state’s $15 minimum wage boost into law, UC Berkeley Chancellor Nicholas Dirks sent a memo to employees announcing that 500 jobs were getting cut.

Coincidence? Not really.

Last year, University of California President Janet Napolitano announced plans to boost its minimum wage to $15 at the start of next school year, independent of the state law. Since UC Berkeley was already in financial trouble — it ran a $109 million deficit last year and is projecting a deficit of $150 million this year — number crunchers there had to have factored in the higher mandated wage when making their layoff decisions.

Those workers might want to have a chat with the folks at UC Berkeley’s Center for Labor Research, who just days before Brown signed the wage-hike bill released a study touting the minimum wage as a boon to low-income household breadwinners.

After that report came out, Ken Jacobs, chairman of the UC Berkeley center, told the Los Angeles Times, “This is a very big deal for low-wage workers in California, for their families and for their children.”

It is a big deal, as well, to those soon to be out of work UC Berkeley workers.

But why is anyone surprised about jobs cuts following a wage hike? It’s one of the most basic laws of economics. Any high school kid taking Econ 101 can explain it:  If you raise the price of something, demand goes down.

. . .

To read the rest of the editorial, go to the IBD link: