Politicians elected to positions of power within the state of California fancy that their own assessments of what the details of labor contracts should be are more informed than, and superior to, the actual details that are worked out in markets. So the arrogant and officious rulers in California have ordered trucking companies to raise their employees’ pay. (Specifically, trucking companies operating in California must now pay truckers not an amount based only on the number of miles driven but, rather, also for the time the truckers spend fueling, eating, and doing some other non-driving activities.)
Guess what. Trucking companies aren’t simply absorbing these higher labor costs. Instead, trucking companies are passing along these higher costs to customers in the form of higher prices . Higher prices, of course, will reduce over time the quantity demanded of shipping services from trucking companies – which will, in turn, reduce the demand for truck drivers. Also, of course, consumers in California – as well as producers in California – will suffer from the resulting reduced supplies of consumer goods and of inputs.
Who’d a-thunk that arbitrary government alterations of labor contracts will lead to eventual harm to many of the workers that the government officials ostensibly want to help?