Wednesday, January 10, 2007

"Giving" America a Raise?

I despise the idea that lies behind this particular Democratic slogan, which is, of course, used to sell the idea of raising the federal minimum wage. It assumes that all Americans in all industry - public and private - work for the government. It sounds generous, but the reality is that it's generosity with other people's money. And there's another word to describe being generous with other people's money: Theft.

It's dishonest, too. Most people make far more than the minimum wage, and those who do don't stay at that wage very long. Indeed - raising the minimum wage would only hurt the people at the bottom the the economic ladder (so called because all Americans have the ability to climb higher on it). If we require a "living wage" which can support a family of four, then we deprive high school students and other young people the opportunity to break into the system, while at the same time depriving an entrepreneur - the real strength of the American economy - the opportunity to mitigate the risk to his investment by hiring cheaper (and legal) labor. There's nothing wrong with expecting an 18 year old to live with three of his buddies and share the rent when he's first entering the work force.

Nor does raising the minimum wage really do anything to reduce poverty - just ask anyone who was around in 1938 facing 19% unemployment how much it helped Americans support their families.

Not only is it bad policy, but it's one of the most egregious abuses of the Interstate Commerce Clause the federal government has ever foisted upon the country. Even if a minimum wage was necessary, this is exactly the kind of policy best left to the states with their highly varied economies, costs of living, etc. "One Size Fits All" programs rarely do, and all this does is take away the ability of states to manage their own economies. If you have told the founders that the Constitution they were signing would make it legal for a Massachusetts Senator who grew up on his father's money to set wage scales for a Pennsylvanian factory, it never would have been ratified. Indeed, most states have their own minimum wages, higher than the proposed federal hike. There is no pattern of better economies or decreases in poverty rates in those states, or such patterns would be part of the selling package. It is nothing more than an abuse of federal power, and a naked attempt to buy votes with other people's money.

George Will puts it best:
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.
If Nancy Pelosi wants to "Give America a Raise," I'll thank her to use her own money to do so. Or support more tax cuts, which have the same effect sans the negative economic impact that comes when startup businesses can't afford low-skilled employees. The federal minimum wage is bad for workers, bad for employers, bad for the economy, and makes a mockery of the federal system which once protected our freedoms (of which economic freedoms are a crucial part) by "splitting the atom of sovereignty."

1 comment:

Wesley Hottot said...

Excellently put. I would add that federalism has its mysterious ways. The president will trade small business tax cuts for his signature. And he's expected to get them.

There's no effect in Washington. RCW 49.46.020. I think it's $7.93 but at any rate it's tied to the Consumer Price Index.