ARC's 1st Law: As a "progressive" online discussion grows longer, the probability of a nefarious reference to Karl Rove approaches one

Friday, January 05, 2007

Will on the Minimum Wage Idiocy

George Will has an excellent article on the minimum wage push... Will the GOP and W have the cojones to stop it? I think not...



January 4, 2007 -- A FEDERAL minimum wage is an idea whose time came in 1938, when public confidence in markets was at a nadir and the federal government's confidence in itself was at an apogee. This, in spite of the fact that, with the 19 percent unemployment and the economy contracting by 6.2 percent in 1938, the New Deal's frenetic attempts had failed to end, and perhaps had prolonged, the Depression.

I love it when the "progressive" Democrats push to protect New Deal initiatives. That's not progressive.... that's conservative! And what bearing does a 1930's era program have on todays highly competitive and globalized economy? ANyway, back to George:
Today, raising the federal minimum wage is a bad idea whose time has come, for two reasons, the first of which is that some Democrats have a chronic and evidently incurable disease - New Deal Nostalgia. Witness Nancy Pelosi's "100 hours" agenda, a genuflection to FDR's 100 Days. Perhaps this nostalgia resonates with the 5 percent of Americans who remember the 1930s.

Second, the president has endorsed raising the hourly minimum from $5.15 to $7.25 by the spring of 2009. Besides, there would be something disproportionate about the president vetoing this feel-good bit of legislative fluff after not vetoing the absurdly expensive 2002 farm bill, or the 2005 highway bill larded with 6,371 earmarks, or the anti-constitutional McCain-Feingold speech-rationing bill.

Democrats consider the minimum-wage increase a signature issue. So, consider what it says about them:

Most of the working poor earn more than the minimum wage, and most of the 0.6 percent (479,000 in 2005) of America's wage workers earning the minimum wage are not poor. Only one in five workers earning the federal minimum live in families with household earnings below the poverty line.

Forty percent of American workers are salaried. Of the 75.6 million paid by the hour, 1.9 million earn the federal minimum or less, and of these, more than half are under 25 and more than a quarter are between 16 and 19. Many are students or other part-time workers.

Sixty percent of those earning the federal minimum or less work in restaurants and bars and are earning tips - often untaxed, perhaps - in addition to their wages. Two-thirds of those earning the federal minimum today will, a year from now, have been promoted and be earning 10 percent more.

The federal minimum wage has not been raised since 1997, so 29 states with 70 percent of the nation's work force have set minimum wages of between $6.15 and $7.93 an hour. Because aging liberals (clinging to the moral clarities of their youth) also have Sixties Nostalgia, they are suspicious of states' rights. But regarding minimum wages, many have become Brandeisians, invoking Justice Louis Brandeis' thought about states being laboratories of democracy.

But wait. Ronald Blackwell, the AFL-CIO's chief economist, tells The New York Times that state minimum wage differences entice companies to shift jobs to lower-wage states. So: states' rights are bad, after all, at least concerning - let's use liberalism's highest encomium - diversity of economic policies.

The problem is that demand for almost everything is elastic: When the price of something goes up, demand for it goes down. Obviously were the minimum wage to jump to, say, $15 an hour, that would cause significant unemployment among persons just reaching for the bottom rung of the ladder of upward mobility.

But suppose those scholars are correct who say that when the minimum wage is low and is increased slowly (proposed legislation would take it to $7.25 in three steps), the negative impact on employment is negligible. Still, because there are large differences among states' costs of living, and the nature of their economies, Sen. Jim DeMint (R-S.C.) sensibly suggests that each state should be allowed to set a lower minimum.

But the minimum wage should be the same everywhere: $0. Labor is a commodity; governments make messes when they decree commodities' prices. Washington, which has its hands full delivering the mail and defending the shores, should let the market do well what Washington does poorly. But that is a good idea whose time will never come again.

The biggest problem with increasing the minimum wage is that it hurts those it intends to help (those with minimal skills who may be deemed unworthy of the minimum pay given the lack of skills that they possess). This also feeds illegal immigration in two ways: first, those from underdeveloped economies like Mexico see an increase in the minimum as added incentive to attempt the crossing; and second, employers who have a choice between hiring an unskilled, legal laborer at the Federal minimum and hiring an unskilled illegal at below minimum will choose the latter. (The illegal has little incentive to report the violation, since they feel that they'd be deported if discovered.)

And this gets me to the guest worker program. One of the ways that the guest worker program would help the immigration problem is by putting all of the illegals "on the books" and paying them the appropriate minimum wage. Employers could no longer intimidate the illegals into accepting below minimum rates. And once you have compliance with a guest worker program, you have control... Today we have neither.

Your Co-Conspirator,
ARC: St Wendeler