Minimum Wage Issues

 

Liberals and other left-wingers will always appear more popular than Conservatives or right-wingers. It is easy for them to pose as champions of humanity, especially the poor and the “marginalized.” They are soft-hearted on so many issues in contrast to hard-hearted conservatives. One of these popular issues is the minimum wage.

 

How could anyone be against doubling the national minimum wage from a meager $7.25 an hour to $15.00 an hour? How can anyone be expected to live on $7.25 an hour or about $14000 per year? Certainly, no one could support a family on such an income.

 

Increasing the minimum wage is so popular that Democrats from President Biden on down will use the issue like a sledgehammer to beat down Republican opposition. A liberal columnist in my local newspaper devoted his last column to berating small business owners for opposing the increase in the minimum wage even though Connecticut’s minimum is well above the average. He went so far as to tell these employers to go out of business if they could not afford to give their employees a 50% increase from $10 to $15 an hour. Did it occur to him that if these employers went out of business, their employees would have no income?

 

That made me smile because a couple of years ago, I sent an article to that paper for publication. The editor accepted it but told me that the paper could not afford to pay me for it. I guess the minimum wage at his paper was Zero. A few years ago, I did get paid for a submission to the Wall Street Journal, a profit-making news organization with a conservative editorial bent.  

 

It will do no good for economists or journalists to point out that increases in the minimum wage will cause many low-income employees to lose their jobs, and find that their wage has been reduced to zero. 

 

Nor will it do any good to point out that most people who earn the minimum wage are not just living on the minimum. Often the minimum wage earner is not the sole support of a family. Often, their wages are supplemented by employee benefits or government subsidies and tax credits. Today, an article in the Wall St. Journal estimated that these benefits could amount to over $40000 per year. Any such arguments will be drowned by placard waving protestors.

 

I would like to urge liberals and progressive supporters who support increasing the minimum wage to $15 an hour to practice it themselves. Instead of asking business owners to cut into their profits, university professors can reduce their salaries in order to increase the wages of the miserably underpaid “adjunct” instructors or graduate assistants that universities hire to save money. Even university student activists could voluntarily pay increased fees in order to raise the salaries of the cafeteria ladies and janitors. 

 

A few years ago, my wife’s cousin told me about the problem that her home cleaning business was facing in Martha’s Vineyard, the toney retreat of wealthy liberals like ex-President Obama. In her business she complied with all the various government rules and regulations but found that she was losing customers to immigrant labor that did not comply with such things as workers’ comp or minimum wage. Apparently, liberals can be soft-hearted when it comes to other people’s money, but hard-hearted when it comes to their own.

 

 

Of course, all of the above would be met with the greatest resistance. When progressives call for increases in the minimum wage, they always expect and want someone else to bear the cost. The professors and the students can be excused for their innocence, but the unions have a baser reason for supporting increasing the minimum wage.

 

Suppose you were running a small business and you hired a high school or college student to do basic office work like filing papers. Suppose you even started the student at $10 an hour, more than the current minimum. You might have other employees in the office making $20 an hour. What would these employees think if you had to raise the student’s pay to $15 an hour? Wouldn’t you have to raise their pay to $30 an hour because the work they were doing was twice as valuable as the student’s?

 

Actually, this is the reason why unions are big supporters of increases in the minimum wage. Union employees all earn more than the minimum wage but every time the minimum is raised, they insist on, and usually get, corresponding increases in their own pay scales. They could care less about people who are actually earning the minimum wage. They even care little about their own members who are at the bottom of the wage scale. Rather than cut their own pay or benefits, they will normally acquiesce in the layoff of younger, recently hired union members when times get tough. 

 

The best cure for low wages is full or high employment. Before the pandemic hit, the number of unemployed has dropped to record levels. Moreover, the level of part-time employment had also declined as increasing numbers of part-time workers found full-time jobs. In the first three years of the Trump administration there was  a scarcity of workers that inevitably led to higher wages for all. Job mobility, not minimum wage laws, leads to higher income.

Ironically, what liberals give with one hand they usually take away with the other. The almost $2 Trillion Covid spending bill provides a good example. Where is the government getting the money to dole out? It is already trillions in debt. It must either borrow more money or print more paper. The stimulus checks we get are like Monopoly money, and they will buy less and less.

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Progressive Issues 2019

      

Democrats have taken over the House of Representatives in Washington, and two years of President Trump seem to have made “blue” states even bluer. In the mid-term elections Democrats not only made significant gains in numbers, but also politically inexperienced Progressive new faces have caused the party to shift further to the left. 

Popular Progressive issues are now on the agenda both nationally and locally. Among these issues are an increase in the minimum wage to $15 an hour; free college education; and extended family leave for workers who need time off to help out at home. I know that it’s useless to raise objections or even try to discuss these popular issues that sound so noble and caring. But let’s still try.

Issue 1: Minimum wage increase. The best cure for low wages is full or high employment. In the last year the number of unemployed has dropped to record levels. Moreover, the level of part-time employment has also declined as increasing numbers of part-time workers have found full-time jobs in the past two years. We now have a scarcity of workers which must inevitably lead to higher wages for all. Job mobility, not minimum wage laws, leads to higher wages.

History has shown that increases in the minimum wage often drive the lowest paid and least skilled workers out of their jobs. Moreover, the secret about increases in the minimum wage is that it benefits the middle class more than the poor. If you are a store manager at McDonald’s currently making $15 an hour, what happens when a cashier just out of high school starts making the same salary. The manager’s salary must also be increased. 

For this reason, union members, who always make more than the minimum wage, are strong supporters of substantial increases. It’s certainly not compassion for the poor and the lowly, who usually find it very difficult to get into unions in the first place. A quick web check showed that white males make up 75% of the Carpenter’s union, an important element in the huge construction industry. 

Issue 2: Free College Education. Free college tuition is a misnomer. Even if students do not have to pay tuition, someone will still have to bear the cost. Actually, taxpayers traditionally have borne the cost of public elementary and high school whether they have children or not. But what about college?

Actually, it has already been tried. When I was in high school during the fifties, the New York City colleges were tuition free. There was a catch, however. An admission test was required that effectively limited enrollment to the best students in the city. As a result, City College (CCNY), and Brooklyn College were on a par with the best in the country. Jewish students predominated since their parents seemed to prize higher education more than other ethnic groups.

During the political turmoil and race riots of the sixties, protestors criticized the high admission standards, and demanded enrollment open to all.  As it turned out, open enrollment benefitted the white middle class more than black or Hispanic minorities. Children of Irish and Italian immigrants were the greatest beneficiaries. 

Even today the graduation rate in virtually free community colleges for black and Hispanic students is well below average. This is not a matter of racial inferiority. If there is little or no support at home, even free tuition will not help someone get through college. Statistics that show that college graduates make more than others only mean that graduation rates are important.

Issue 3: Paid Family Leave. Over the holidays I spoke with someone who works for a large manufacturing company. The company has already provided its union employees with a generous sixteen week paid family leave benefit. It would appear that the program is not only being used but that it is being abused. Workers seem to jump at the chance to get paid for not working. Some get friendly doctors to certify that they are having problems with stress. Others even work other jobs while out on family leave.

I suspect that most Progressives have never formally employed anyone outside of the government sector. In government they spend other people’s money. But what if they had to use their own money? For example, what would Progressive celebrity Alexandria Ocasio-Cortez do in the following situation. She goes to her favorite nail salon and the proprietor informs her that Maggie, her favorite, is on a four-month family leave but that Amy will take care of her. However, she will have to pay and tip both Maggie and Amy until Maggie returns to work. I wonder how she or any Progressive would respond?

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Issues 2016: Minimum Wage

                                        

The minimum wage will probably be a big issue in this year’s presidential campaign. Increasing the minimum wage is so popular that Democrats from Hillary Clinton on down will use the issue like a sledgehammer to beat down Republican opposition. Already Donald Trump, the Republican presumptive nominee, has admitted that he doesn’t see how anyone can live on the current Federal minimum wage of $7.25 an hour. He would only leave it to the 50 states to set their own minimum wage level.

In the campaign it will do no good for economists or journalists to point out that increases in the minimum wage will cause many low-income employees to lose their jobs, and find that their wage reduced to zero. Just this day in trying to deal with an issue about the delivery of our Wall St. Journal, we discovered that the phone representative was in Manila.

Nor will it do any good to point out that most people who earn the minimum wage are not just living on the minimum. Often the minimum wage earner is not the sole support of a family. Often, their wages are supplemented by employee benefits or government subsidies and tax credits. Any such arguments will be drowned by placard waving protestors.

Donald Trump doesn’t need any help from me but I would suggest that he ask the progressives who support doubling the minimum wage to $15 an hour to pay for it themselves in the same way that he wants the Mexican government to pay for the Wall on the border.

He could ask university professors to reduce their salaries in order to increase the wages of the miserably underpaid “adjunct” instructors or graduate assistants that universities hire to save money. He could ask university students to pay increased fees in order to raise the salaries of the cafeteria ladies. He could even ask so-called public service employees to take a cut in pay in order to raise the minimum wage for the people they serve.

Of course, all of the above would be met with the greatest resistance. When progressives call for increases in the minimum wage, they always expect and want someone else to bear the cost. The professors and the students can be excused for their innocence, but the unions have a baser reason for supporting increasing the minimum wage.

Suppose you were running a small business and you hired a high school or college student to do basic office work like filing papers. Suppose you even started the student at $10 an hour, 40% more than the minimum. You might have other employees in the office making $20 an hour. What would these employees think if you had to raise the student’s pay to $15 an hour? Wouldn’t you have to raise their pay to $30 an hour because the work they were doing was twice as valuable as the student’s?

Actually, this is the reason why unions are big supporters of increases in the minimum wage. Union employees all earn more than the minimum wage but every time the minimum is raised, they insist on, and usually get, corresponding increases in their own pay scales. They could care less about people who are actually earning the minimum wage. They even care little about their own members who are at the bottom of the wage scale. Rather than cut their own pay or benefits, they will normally acquiesce in the layoff of younger, recently hired union members when times get tough.

This scenario is being played out right now in my own state of Connecticut. Once again the State is facing a massive budget deficit but the Democrat governor and legislature are in bed with the public service unions. The State faces cutbacks in public spending as well as layoffs of largely lower salaried employees. At the same time, there is no growth in private sector jobs as companies like General Electric have chosen to leave the State. Currently, the State is ranked as one of the least attractive for business in the country. One of the reasons could be that the State has a minimum wage level higher than the Federal level. At $9.60 an hour it is 30% higher than the Federal level, and scheduled to go even higher.

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Minimum Wage Madness

      

Hillary Clinton has just announced her candidacy for the Presidency in 2016. Predictably, her big issue is “income inequality,” a problem that she and other like-minded Democrat politicians claim has gotten worse and worse in recent years. Never mind that these years include almost six and a half years of the Obama administration.

Despite all the problems in the world today, it would appear that “income inequality” will be the big issue in next year’s election campaign. Already activists are taking to the streets in demands to increase the minimum wage in the country to $15 dollars an hour. April 15, the tax-filing deadline, saw mobs disrupting traffic in New York City, and demonstrators marching on the State Capitol here in Connecticut.

I would bet that hardly any of these demonstrators had ever employed anyone, except baby sitters. The great majority have no idea of what it means to meet a payroll every week. Of course, when their upper class liberal supporters hire gardeners, and cleaners, they are notorious for their own parsimony. I recently talked to someone who owns a house cleaning service in Martha’s Vineyard, a trendy vacation island off the coast of blue state Massachusetts. She complained that while her business that complies with all employment standards, the wealthy vacationers prefer to hire illegal immigrants to clean their homes at markedly lower rates.

Most of the demonstrators and their liberal supporters think that business owners, big or small, are rapacious, greedy wolves. Why do they think they will act like sheep willing to stand by placidly while they are being sheared? Despite the good intentions of those who think an almost 100% increase in the minimum wage will help those on the bottom of the economic ladder, there is evidence that it will do more harm than good.

A recent legislative proposal by Marilyn Moore, a newly elected representative to the Connecticut State Senate from the city of Bridgeport provides a good example of the potentially bad effects of mindless legislation. The Senator proposes that any large corporation in Connecticut that does not raise its minimum wage to $15 per hour will be subject to a large fine for each employee under her desired minimum.

She expects that the legislation will bring in millions in fines that could be then used to alleviate the plight of the poor. Let’s just skip over the fact that a recent large tax increase failed to bring in the projected revenues, or that the monies raised did not necessarily go to the poor, but concentrate on the fact that this proposed legislation might cause many low income employees to lose their jobs.

Senator Moore targeted General Electric (GE), one of the large corporations in Connecticut. GE’s corporate headquarters are located in my hometown of Fairfield. GE is the biggest taxpayer in Fairfield paying about 2 Million dollars a year in real estate taxes. It is therefore the largest supporter of our town services like public schools and police and fire departments. Moreover, GE employees who live in Fairfield and other Connecticut cities pay state income taxes, state sales taxes, and local real estate and personal property taxes.

What would prevent GE from moving its corporate headquarters to another more tax friendly state like Texas or Florida? The huge company is in the process of divesting itself of its financial arm, and so would seem to have less reason to remain close to New York City. The loss of GE would be a catastrophe. Taxpayers in Connecticut and Fairfield would have to bear a heavier burden. Thousands of employees would either relocate out of state or just lose their jobs. Many peripheral companies and workers would also lose their best customer. Finally, the low paid workers that Senator Moore is hoping to aid would suffer the most. They will probably never have as good a job as the one they had at GE.

I don’t want to sound like an alarmist but just today headlines noted that retail giant Walmart just closed four stores and 11000 employees lost their jobs.

Nevertheless, politicians from lowly state senators to presidential candidates like Hillary Clinton will continue to rail against income inequality. Speaking of Mrs. Clinton the Wall St. Journal noted this week that she gets paid $300000 for her speaking appearances. In addition, she insists that all her expenses be paid by the sponsoring organization. These expenses include the most expensive suite in the best hotel, and a private jet round trip.

If she gives just one speech a month, that comes to $3.6 million per year. It’s also tax-free since it goes into the Clinton Foundation whose primary social welfare program this year would appear to be getting her elected President in 2016. The companies who pay her the $300000 can write it off as a business deduction. What a joke! But the jokes on us.

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