A study in liberal “good” intentions.
Once again Democratic politicians want to increase the dosage of a popular but extremely toxic form of public policy snake oil. In his State of the Union message Tuesday President Obama proclaimed, “Tonight, let’s declare that in the wealthiest nation on earth no one who works full time should have to live in poverty, and raise the minimum wage to $9 an hour. We should be able to get that done.” Pat Quinn, the governor of Illinois, last week proposed raising his state’s minimum wage from the current $8.25 an hour to $10 an hour.
A spokesman for Governor Quinn said, “The governor feels very strongly that nobody should work 40 hours a week and live in poverty. It’s obvious the governor feels such an increase will be good for the economy and good for workers who drive our economic growth. So many people are struggling to make ends meet earning the basic minimum wage—and these ends never get met.” If that’s what the governor thinks, he couldn’t be more confused.
As H. L. Mencken observed, “There is always an easy solution to every human problem—neat, plausible, and wrong.” Minimum wage laws score extremely well on all three counts.
Minimum wage laws are an important public policy issue not only for the damage they do to individuals and the economy, but also as an illustration of the profound difference between liberal and conservative approaches to problem solving.
The federal minimum wage for 2013 is $7.25. San Francisco, not surprisingly, has the country’s highest minimum wage—$10.55
When I taught economics, when possible I liked to use the “Socratic method,” which is essentially teaching by asking questions. The Socratic method helps the student deduce the answer by using what he already knows.
Most people, especially college freshmen and sophomores, feel that minimum wage laws are beneficial. When discussing the topic I would ask, “If a minimum wage of $8 is better than one of $5, why skimp? Why not make the minimum wage $10, or $20, or $30?” Passing minimum wage laws is relatively easy. If eliminating poverty is that easy, why not go all the way? Why be so miserly? It’s not your money you’re spending. Go big or go home!
Most people realize that a minimum wage of $30 or $50 an hour would not work or be a good idea. They recognize that employers simply could afford to hire far fewer people at such wages. Most people can appreciate that not everyone is worth $30 an hour. Minimum wage laws at those levels would do major damage to the economy. Less obvious is the fact that virtually any minimum wage does the same kind of damage.
A favorite talking point of minimum wage proponents is the so-called “living wage.” They argue that the minimum wage is the absolute least a person can survive on. But why settle for mere survival? Why not set it high enough to move every working person into the middle class?
President Obama said in his speech, “But today, a full-time worker making the minimum wage earns $14,500 a year.… Even with the tax relief we put in place, a family of four who earns the minimum wage still lives below the poverty line. That’s wrong.” A minimum wage of $30 would give that family an annual income of $60,000. Go for it!
Minimum wage laws are one of the many ways the government commandeers private companies into its ill-conceived crusades for solving societal problems (the “war on poverty,” for example). It is essentially a form of “taking,” that is, the taking of private property for public use without compensation. Such laws ought to be considered a violation of the Fifth Amendment. Minimum wage laws force private companies to supposedly help solve the societal problem of poverty. If you start a business, be prepared not only to provide a product or service for your customers, but also to provide a service for politicians.
It’s an easy and alluring fix for politicians. Rather than having to tax the private companies and spending the proceeds on welfare, they dictate that the private companies do it directly. It’s deceptively simple and straightforward. Besides being insidious, it’s also counterproductive. Minimum wage laws do not decrease poverty, they actually increase it, probably more than any other single law.
You could have a job that pays $4 an hour where you learn something, develop good work habits, and increase your marketable skills, or you could have no job, earn zero dollars an hour, and have no chance make progress. The true “minimum wage” is not $7.25, it’s zero. The minimum wage doesn’t assure a “living wage,” rather it assures a job-killing wage.
Is a high school dropout with no work experience worth the minimum wage? Are all jobs (sweeping the shop floor, for example) worth the minimum wage? At a time when the nation is desperate for “job creation” the minimum wage is by far the worst job destroyer. Minimum wage laws effectively outlaw all jobs with less economic value than the minimum wage. Rather than appreciating the fact that there are millions of job situations in our economy, such laws apply the government’s typical, crude, one-size-fits-all approach.
Furthermore, when someone is paid $7.25 an hour, the total cost for the employer is considerably higher. Various payroll taxes and fringe benefits typically add another ten to twenty percent or more to the cost of hiring someone.
A man of faith in a godless age is hitting Americans where it hurts.
Mr. and Mrs. American Spectator Reader, let P.J. O’Rourke talk sense to your kids.
In Britain, defending your property can get you life.
It won’t take long for conservatives to scratch this presidential wannabe off their 2008 scorecard.
Was the President done in by the economy, or by the politics of the economy?