Can the government force companies to rehire employees after minimum wage hike layoffs?

This is a topic we’ve covered at length here previously, but in New York State the story is taking an odd twist. The subject is the Fight for 15 and the successful efforts of Democrats to jack up the minimum wage faster than market forces would normally have allowed. It seems to have come as a great shock to almost nobody that this resulted in layoffs, particularly among lower-skill, entry-level workers in the fast food industry.

This has some of the newly unemployed understandably upset and they’ve been taking their complaints to their elected representatives. But what are they to do? The free market follows its own rules, and if labor costs rise too quickly, profits evaporate and employers have to take appropriate measures. But wait! This is New York City, after all. The workers are now asking the City Council to intervene on their behalf and protect them from “unfair firing.” (New York Times)

Now, they are asking the City Council to shield them from being fired without a valid reason. That protection, the sort of job security that unions usually bargain for, would be a first for a city to provide to workers in a specific industry, labor law experts said.

City Councilman Brad Lander said he planned to introduce a bill on Wednesday that would require fast-food businesses to show “just cause” for firing workers and give them a chance to appeal dismissals through arbitration.

Mr. Lander, a Democrat from Brooklyn, said he was responding to surveys of fast-food workers indicating that “there’s a substantial percentage of employees that have been fired unfairly.” One woman said she was fired from a Chipotle restaurant for not smiling enough.

If they get away with this it will deal a serious body blow to capitalism. First, the government forces the companies to pay more in wages than their current business model can sustain. Some of the restaurants respond by cutting back hours and eliminating staff to keep the business profitable. And now the municipal government wants to create for themselves the power to demand that any workers who are let go be allowed to petition to get their jobs back unless the employer can show “just cause” for the dismissal.

If such a rule were in place, the government would be able to drive the restaurant back into unprofitability, leading to their only other choice being to shut the place down. And then nobody will have a job. Brilliant logic, New York.

In the vast majority of cases, people who lose their jobs do so for “just cause.” (Exceptions would be firings in reprisal for refusing sexual advances or other criminal activity. The workers clearly need recourse in such cases.) That cause doesn’t have to be poor performance. It may be the fact that the employer can’t afford to pay everyone that much. In cases like that, decisions will have to be made as to who the top performers are and others may be let go even if they were considered competent enough to keep on the payroll if the business was still profitable. That doesn’t mean you were “unfairly” fired.

New York is leading the way in nanny state power grabs, and this is only the latest. They managed to cost a lot of minimum wage workers their jobs, and now they might put even more people on the unemployment line by shutting down their employer’s operation.