Minimum Wage Hike Another Blow At Poor
Here we go again on the minimum wage carousel. Around and around it goes. Where it stops, nobody knows.
Perhaps the most stupid law ever invented by the U.S. Congress – one-upped by a few states including Florida – is headed for a soul-searching séance.
At this count, 26 states have legislated the federal minimum of $5.15 per hour. Seventeen, and the District of Columbia, have raised the bar – to be topped by Washington state’s $7.63. Kansas set a rate of $2.65. Six have no minimum.
Seven of the states with minimum wage – not including Florida – exempt businesses with fewer than four employees – a glimmer of good sense.
Congress is gearing up to raise the recommended minimum wage to $7.25. After all, this is an election year, and our solons have just given themselves a $3,300 pay raise to $168,500 – plus staff expenses.
Howard “Yeehaw” Dean, Democratic National Chairman, last week rejected as “mumbo jumbo” the warnings by supply-side economists that raising the minimum wage would cause unemployment.
He was speaking to a crowd at the ultra-liberal National City Christian Church, Washington, D.C. Following the stem-winder, parishioners filed out to the street – chanting for passing cars: “Hey, hey, ho, ho, poverty’s got to go.”
As my Grandpa used to say: “The road to hell is paved with good intentions.” Indeed, the minimum wage bloody-shirt is being waved just as the U.S. Labor Department issued employment figures.
The unemployment rate is down slightly to 4.6 percent (6 percent the average since President Truman invented the statistic). More than 160,000 jobs were created in June as high school and college graduates moved into the labor market. The economy is expanding at a 5.6 percent rate – when 3 percent is considered great. (Inflation, consequently, lurks around the corner – a problem for the Federal Reserve to wrestle with.)
Dean, liberal Congress members, and socially slanted bleeding hearts, subscribe to the myth that “working poor” receive an economic boost when the minimum wage is raised. Labor Unions love it. All other labor costs ratchet up quickly to maintain wage relativity. The only long-term effect is that low-skill jobs are replaced with labor saving equipment or “out sourced” overseas.
Worst of all, any wage that increases – without an equal boost in productivity – is a delusion. It simply devalues money. Three months after a minimum wage increase, low-income earners are back where they were in purchasing power. Every American pays higher costs for every thing. A loaf of bread cost 15 cents when Truman was president.
A national minimum wage of 25 cents per hour was adopted in 1938 to cope with the Great Depression. That horrendous, economic disaster – triggered by excessive import taxes worldwide – faded away during World War production goals.
Nevertheless, the minimum wage took on a new mission – to fight the “War On Poverty.” In reality, it drove away low-skill jobs like agriculture and low-level manufacturing.
It is not a coincidence that the states of Alabama, Arizona, Louisiana, Mississippi, South Carolina and Tennessee refuse to adopt a minimum wage as they fight back to economic stability.
The minimum wage is a handicap for the very people it is meant to benefit. Of the one-and-a-half percent work force that earns the minimum wage or less (about two million people), more than half are below age 25. A fourth of these are between the ages of 16-19.
In short, low-paying jobs are mostly entry-level. Competent workers move up the ladder. Certainly a family of four cannot live comfortably for $25 a week – or the $38 proposed – even with food stamps and public housing. An able-bodied man can make more than that by washing restaurant dishes.
So, why handicap a free economy that leads the world in pay and opportunity? Making do-gooders feel better – and re-electing politicians – is not sufficient to compensate for the handicap.
If earning power can be increased with the stroke of a pen, we should legislate a $100-per-hour minimum wage. Then we could all get rich mowing each other’s lawns.
July 9, 2006