The Democratic juggernaut has slowed. The House has approved a
minimum wage increase as part of the “100 hours” agenda. But a
filibuster has blocked a vote in the Senate.
Of course, Republicans there are not going to stop the hike.
Instead, they are demanding a minor concession — some tax breaks
for small business. An amended bill will almost certainly pass,
though Democrats are still pressing for “clean” legislation.
The minimum wage has proved to be a popular bandwagon, with
scores of House Republicans joining Democrats in voting to raise
the rate from $5.15 to $7.25 an hour. Even the White House has
signed on, so long as Congress distributes a few tax goodies to
Republican-leaning small businessmen.
Alas, the minimum wage has not become better policy because of
the new GOP embrace.
The usual arguments on behalf of the minimum wage are simply
wrong. Rarely do workers support families on the minimum wage.
Columnist Mona Charen points to Labor Department data that more
than four in five minimum wage recipients have no dependents. Most
are second or third earners in a family, not heads of households.
Just 1.2 percent hold full-time jobs. Most are below age 25 and
almost half of their families earn above $60,000 a year.
Instead of helping those most in need, the minimum wage prevents
the most disadvantaged from getting a foot on the ladder of
economic success. If you raise the cost of hiring workers, fewer
will be hired. If you raise the salary that must be paid, employers
will reject those with the least skills, education, and
training.
If there is one issue about which economists agree, it is that
the minimum wage destroys jobs. Indeed, whatever legislators might
say in public, they obviously understand this point. After all, if
you could raise wages without consequence, then Congress should up
it to $100 or $1,000 an hour and make all of us rich.
The only question about an increase, whether to $7.25 or $1,000,
is how many jobs are destroyed. Raising the minimum wage has
discouraged employment of minority teens, spurred mechanization,
and encouraged substitution of fewer, better- trained workers for
unskilled laborers. (This, of course, is why organized labor backs
government wage-setting.) In short, the minimum wage, however well
intentioned, hurts those it is supposed to help.
The best argument for raising the minimum wage today is that
doing so will only have a modestly negative effect since the
minimum hasn’t been increased for some time. Alas, that doesn’t
help the workers who still will lose their jobs.
Of course, economic arguments have had little impact on the
minimum wage debate. Instead, the wage hike is being propelled by
emotion, the sentiment that people simply “should” be paid
more.
THAT THE LEFT PREFERS to emote than to analyze comes as no
surprise. Alas, it is not only liberals who believe in
sentimentality as a basis for legislation. So, apparently, do the
moderate Democrats elected in November, who are supposed to make
this Democratic majority different from previous ones. These
legislators all voted to raise the minimum wage.
Indeed, Rep. James Clyburn (D-SC), the new majority whip who
leads a “faith working group,” defines raising the minimum wage as
a “values” issue. Rep. Heath Shuler (D-NC), the pro-life, pro-gun
former Redskin quarterback who upended a GOP incumbent, said of
hiking the minimum: “To me that’s a moral issue. That’s where I’m
with my party.”
In what way, however, is voting to make other people pay someone
a higher salary a moral action?
Forcing others to do what one believes to be a good deed is a
form of cheap grace. I receive a benefit, in this case winning
votes, while making someone else, namely employers, bear the cost.
Such a deal!
As Marvin Olasky has pointed out, compassion once meant to
suffer with, to actively help those in need. Compassion then turned
into writing checks — a worthy activity, to be sure, but very
different in its impact on both giver and recipient.
Now compassion means making other people write checks. If you
use compulsion to lift someone else’s wallet and arrange a wealth
transfer, you get to preen in public, proclaiming your moral
superiority and commitment to the common good.
Raising the minimum wage is a particularly inappropriate tactic
to win moral brownie points. Companies that hire unskilled workers
are performing a public service by employing people who have the
most difficult time finding a job. In doing so these firms are
providing an opportunity for future gain — two-thirds of minimum
wage earners win a salary increase within a year.
But the unfairness of the minimum wage runs deeper. Congress has
declared that there is a social interest in raising the wages of
the lowest paid in society. Fine. Then society should pay the
cost.
Putting the entire burden on employers who disproportionately
hire the unskilled is unfair, even, dare one say, immoral. If “we”
all want people to earn more, then “we” should do the paying. “We”
shouldn’t dump the burden on others.
ONE ALTERNATIVE TO THE MINIMUM wage is the Earned Income Tax
Credit. The EITC is essentially a negative income tax, providing
money to low-wage workers. The program has problems of its own,
including fraud. But it puts the financial burden on all taxpayers,
rather than a few employers, and creates no employment
disincentives.
Even better would be to fix an educational system that leaves so
many people ill-prepared for work in an increasingly technological
society. That would empower people to earn more in the marketplace,
rather than rely on politicians to increase their wages, subject to
the whims of public opinion.
In any case, the minimum wage is no answer to the problem of
poverty. It is bad in practice, destroying jobs, especially for the
disadvantaged. If we care about the working poor, we should expand
rather than shrink employment opportunities.
Finally, government wage-setting is, to coin a phrase, immoral.
The minimum wage is the worst sort of feel good legislation. It
purports to help those in need while making others pay the bill.
Which, alas, is what Congress seems to do best. It is precisely the
sort of legislation that principled Republicans at either end of
Pennsylvania Avenue should oppose.
