Posted on 08/05/2006 12:29:52 PM PDT by neverdem
Democrats are lacking in new ideas, so maybe that’s why Republicans are stealing their old ones. With some Republicans' poll numbers looking grim, early last Saturday morning House Republicans rushed through legislation raising the minimum wage. The Senate votes before shutting down for August recess, and will perhaps finish what is supposedly the process of stealing — or at least neutralizing — the centerpiece of the Democrats’ fall election agenda.
Chances for Senate passage are too close to call. Despite Senate Majority Leader Bill Frist's support, many senators on both sides are unhappy. Democrats don't want to give up a campaign issue for the fall and complain that the bill also eliminates the inheritance tax for individual estates under $5 million; Republicans, meanwhile, take unseemly glee in getting Democrats to vote against a minimum-wage increase. But with control of Congress on the line, what is lost in the debate is how increasing the minimum wage harms the most vulnerable workers.
Unfortunately, wages for the lowest paid workers have stagnated. But minimum wage increases merely treat the symptoms. Rather than blaming companies for paying workers too little, politicians might focus on the mediocre public schools that leave young workers inadequately prepared for the workforce. The problem is more likely due to the lack of competition faced by public schools than the intense competition between firms. Simply demanding that workers be paid more doesn’t make them more productive.
A microcosm of this whole debate was on display last week in Chicago, where the city council overwhelmingly approved a $10 an hour “living wage.” While alderman ignored corporate “scare tactics” and swore to “stand firm” with organized labor, even Democratic Mayor Daley understood the consequences and challenged aldermen to say how they would replace the 8,000 jobs if Wal-Mart abandoned its 20-store expansion plan.
On an international level, imposing higher wages that aren’t justified by higher productivity means shipping out jobs to Mexico and China. After all, there are a lot of unskilled workers in the world to compete against. And liberals who support myriad regulations, such as the minimum wage, wonder why firms set up operations abroad.
Unskilled American workers are also replaced with skilled workers, who are more likely to be unionized. A group of unskilled workers with shovels might be able to do the job of one skilled worker with a bulldozer, and if their wages are low enough, firms will hire them instead. Raise their wages and the firm won’t hire them. It is not really any surprise that unions protect their already existing workers over those non-members who are just starting up the ladder.
Even among low skilled workers, it is the least skilled, poorest workers who are the most likely to lose their jobs because of a higher minimum wage.
The point of all these examples is simple: if shovels cost more, people buy fewer shovels. Economists call it the “Law of Demand” for a reason. Higher priced shovels mean that some firms will replace them with something else.
And there are other consequences. Professors David Newmark at UC Irvine and Olena Nizalova at Michigan State found that a higher minimum wage reduces how much firms invest in training young workers, and results in lower wages for these workers when they get older. Anyone who has taken an unpaid internship for a summer knows that it is an investment in the future, in which one gains experience in exchange for a small amount of work. Would these interns be better off with a “living wage” but without the internship?
Newmark and Nizalova also found that the benefit of early job experience is greatest for African-Americans, with increased minimum wages reducing their future earnings the most.
“Higher” wages come at other costs. Firms can at least partially offset the higher wages by reducing worker’s benefits, such as cutting or eliminating health insurance. While the federal minimum wage has not yet risen so high, Chicago’s proposed ordinance tries plugging all the holes and mandates $3 per hour in benefits. But this only means that the effect is felt someplace else — namely, more lost jobs.
Nothing comes for free, but if it is important enough, everyone should pay for it through higher taxes. With minimum wages, it is especially African-Americans, the unskilled, and the poorest Americans who really bear the burden of helping others. Republicans have enough good ideas. They don’t really have to steal old discriminatory retreads from the Democrats.
— John R. Lott Jr. is the Dean’s Visiting Professor at the State University of New York at Binghamton.
Don't know, how about asking the bunch of Repubs that have jumped on the illegal alien amnesty-scam bandwagon even when they know it pisses of their constituents to no end?
Honestly, I agree with you but there are literally dozens of illegal threads that have already pointed this out without your hijacking.
Right here: "Unfortunately, wages for the lowest paid workers have stagnated."
However; I don't have a dog in this fight...I don't own a business that hires unskilled workers & I don't have anyone that I know that needs an 'unskilled' level of employment...so, maybe I am missing something. It just seems no one could remotely make any type of a living on minimum wage without goverment assistance. Wouldn't a raise eliminate a lot of that?
If I broke it down to an hourly wage, my housekeeper would average about $18 an hour...the lawncare guys would be averaging an astounding $96.00 per hour!!! ...and trust me they are all pretty 'unskilled!'
I had never really thought about this before...I had no idea that's how much these guys were earning per hour, I think I am in the wrong line of work...gotta see about buying myself a lawnmower and a weed wacker!!!
This is strictly anecdotal, but I've known a number of young adults, co-workers and family members, who refuse to further their education and have better job chances. One sister moaned to me recently about her two children, both young adults, who have quit school and are working deadend jobs. And worse, living at home again with no prospects of moving out. Nothing wrong with deadend jobs if it supports someone while going to school or as a nice little source of income for a retiree or a spouse who needs a little swag. But my nephew and niece are on the road to nowhere. Their attitudes stink.
With an increase in the minimum wage and the introduction of "living wages", the temptation to hire illegal aliens and pay them under-the-table increases exponentially.
Here's an idea: eliminate the need for a minimum wage by getting all the illegals out of the country. Next issue?
Minimum wage jobs are entry level. Entry level jobs are not meant for making a living on. They are purely entry level or a second job for someone.
A lot of union contracts have their wages set by the minimum wage so if the minimum wage goes up 50 cents, so do all the union wages go up by 50 cents.
These jobs are not there to pay someone "a living wage"-they are set by what the market will bear. If you raise it many business will have to raise their prices or go out of business. How does that help someone making minimum wage if all their disposible income will not buy the necessities because the prices have been raised?
Ok...that's a good point.
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