Wage law increases don’t work
You’re probably tired of hearing about President Obama’s Benghazi cover-up and the IRS attacks on conservative groups and the Department of Justice’s targeting of news media.
And you probably don’t much care about the other big story of the week – unions turning on the president and demanding that Obamacare be repealed or at least changed to their liking.
So let’s move on today and talk about the president’s push to raise the federal minimum wage. Gallup finds that most Democrats and Independents and half of all Republicans support an increase.
The current minimum wage is $7.25 an hour, and the president wants to bump it to $9. (Some Democrat lawmakers want $10.10 an hour.) The president also wants to tie the rate to the Consumer Price Index. (He favors reducing CPI adjustments for Social Security recipients.)
He launched his minimum wage campaign during his State of the Union address in February. He said, ” 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 federal minimum wage to $9 an hour. This single step would raise the incomes of millions of working families.”
Nice words and a pretty good reflection of the utopian principles constructed by John Rawls, a political philosopher and the source for much of Obama’s social and economic policies. (Rawls’ books are required reading in colleges and universities throughout the country.)
But nice words aside, the president’s all wet.
First, his premise is wrong. No one in America is forced to live in poverty.
Second, his conclusion is wrong. Various studies have found that minimum wage increases are, in the words of one analyst, “ineffective as an antipoverty device.”
Third, raising the minimum wage means people lose jobs. Low-skilled workers are hit hardest.
And finally, the president’s suggestion that minimum wage workers support “families” is misleading. Most minimum wage jobs are entry level and held by unskilled single young people.
Let’s give the president four “Pinocchios.”
The wrongheadedness of Obama’s minimum wage position brings to mind another Democrat’s scheme to reduce poverty President Lyndon B. Johnson and his “Great Society” and “War on Poverty” in the 1960s. Those programs have cost taxpayers untold billions of dollars.
So, look around now to see what we’ve gotten for our money. Find a “Great Society?” Nope. And as for the “War on Poverty” well, let’s just say we lost. For more information, contact the good people of Detroit, Mich.
Johnson’s economic programs were “a gigantic waste of taxpayers’ money,” and his social programs were “an almost preposterously bloated collection of social-engineering projects,” to one critic.
Nevertheless, we now have Barack Obama and his minimum wage proposal, which, by the way, would be strapped to the back of an already crippled “free-market” economy.
The consequences of raising the minimum wage: Businesses will offset the higher costs by cutting man-hours and the wages of higher-paid workers. And the prices of goods and services will rise. And poverty will remain.
But hold on. There’s one group that would benefit from a minimum wage increase. Unions.
Peter Roff, writing in U.S. News & World Report, notes that many union contracts, especially federal ones, require that union workers be paid at least the “prevailing” wage rate in a particular area.
The prevailing rate is driven by the minimum wage, so when the minimum rises, the prevailing wage also rises. And that means union wages and dues go up. Roff calls it “a well-disguised give back” to the unions who supported Obama.
And what about the poor?
Some may eventually realize that the quickest way out of poverty is to work hard.
But most will continue on a fool’s errand of voting for fast-talking Democrats and relying on a government that is, itself, $16 trillion in debt.