BCT Editorial – 7/24/05

This page was last updated on July 25, 2005.

Morally right; Editorial; Beaver County Times; July 24, 2005.

The Times and State Rep. Frank LaGrotta (D-10) appear to be on the same page. When you can’t debate an issue with legitimate facts (not the made up variety) and logic, demonize those who disagree with you and resort to name-calling.

Not once does the editorial acknowledge that minimum wages are a form of welfare. The difference between the economic value of a job and the minimum wage is hidden/stealth welfare.

Below is a detailed critique of the subject editorial.

“In the coming debate over raising Pennsylvania’s minimum wage, know this: Neither side can prove its point.

“Gov. Ed Rendell has said that he’ll put hiking the minimum wage at the top of his legislative agenda in the fall. If the Legislature follows his suggestion and increases it to $7.15 an hour, Pennsylvania will join 17 other states in having a minimum wage above the federal rate of $5.15 an hour.”

[RWC] Exactly how will increasing the minimum wage make PA more competitive with the other 32 states? Jacking up the minimum wage has a cascade effect. After you jack up the minimum wage, eventually pay all along the spectrum will increase to reflect the relative economic value of the jobs. Those increases drive up the cost of living and then cause folks like the Times to cry for another min wage hike. What you end up with is the equivalent of a dog chasing his tail.

Remember, these are the same folks who whine about jobs leaving PA.

“Needless to say, the suggestion has sent business groups into a tizzy. They like things just the way they are.”

[RWC] Not exactly. I suspect most businesses would prefer to see the minimum wage eliminated altogether so the free market could determine fair wages at the low end of the wage scale.

“However, both sides will be blowing smoke, and a lot of it, because nobody really knows what impact hiking the minimum wage would have on jobs.

“Governing magazine columnist Alan Ehrenhalt points out the theory that increasing the minimum wage causes employers to fire workers whose productivity doesn’t match the higher pay scale is just that, a theory. There is no ‘solid empirical evidence that mandated minimum wages are actually a bad deal for workers. The problem is that no such evidence exists,’ Ehrenhalt reports.”

[RWC] Can either the Times or Mr. Ehrenhalt provide any examples of price/wage controls providing long-term benefits to either the economy or the worker? Make no mistake about it, when you impose a minimum wage, that’s a form of price/wage control.

“But minimum wage hike backers don’t have much to go on, either. Although two studies done by Princeton University suggested that raising the minimum wage doesn’t reduce the supply of jobs, and may even increase it, Ehrenhalt wrote that it would be unfair to say they had resolved the issue of minimum wages and job markets.

“However, one aspect of this issue should come to bear on the debate: the erosion of the minimum wage in regard to the average wage of American workers.

“The minimum wage was enacted in 1935. At the time, it ‘was equal to nearly 60 percent of the average wage earned by American workers,’ he wrote. ‘Today it’s equal to about 33 percent. For the current federal minimum wage to have the purchasing power it possessed in 1968, it would have to be close to $9.’

“Ehrenhalt makes a good argument for raising the minimum wage by linking it to welfare reform that was enacted in 1996.

“In doing so, pro-minimum wage hikers could counter opponents - and without needing studies or statistics - by arguing ‘that paying a respectable wage is the second-prong of a two-pronged pro-employment strategy that was launched with the passage of the federal welfare reform law of 1996,’ he wrote.

“‘That law was aimed at forcing people off welfare rolls and into the workforce - no excuses for those who refuse to play by the rules. It has succeeded brilliantly. But the second prong is to pay those newly self-sufficient workers enough money to keep them in jobs and off welfare.’”

[RWC] Read the previous three paragraphs carefully. Effectively, Ehrenhalt advocates replacing direct welfare with indirect welfare in the form of minimum wages that pay more for a job than the job’s economic value. It’s not welfare reform when you merely swap hidden/stealth welfare for visible welfare.

“Here’s a way to illustrate that. In 2005, the official federal poverty level for a family of three is $16,090. A full-time minimum wage worker earns $10,712 a year. To reach the official poverty level for a family of three, that worker would have to work 60 hours a week. (And please remember that the official poverty levels set by the federal government are ridiculously unrealistic.)”

[RWC] “Official poverty levels set by the federal government are ridiculously unrealistic?” I suggest you read the following papers.

Understanding Poverty in America (Backgrounder #1713); Robert E. Rector and Kirk A. Johnson, Ph.D.; The Heritage Foundation; January 5, 2004.

Poverty and Inequality; The Heritage Foundation; August 25, 2004.

The Data on Poverty and Health Insurance You’re Not Reading (WebMemo #556); Kirk A. Johnson, Ph.D.; The Heritage Foundation; August 27, 2004.

Below the editorial gets into morality. Is it moral for a person to expect to raise a family on a job with an economic value at the bottom of the ladder?

“Since we don’t know which argument is economically right, let’s make the one that’s morally right and raise the minimum wage in Pennsylvania.”

[RWC] Is it “morally right” to force someone to pay more for a job than the job’s economic value?

Implicit in this sentence is minimum wage opponents are immoral. As I noted above, the editorial and State Rep. Frank LaGrotta are on the same demonizing and name-calling page.