BCT Editorial – 1/25/06

This page was last updated on January 29, 2006.

Hard sell; Editorial; Beaver County Times; January 25, 2006.

Before I begin, it’s important to uncover the true nature of the minimum wage. The difference between a minimum wage and the economic value of a job is nothing less than stealth welfare. Just as the government check and “tax credit” forms of welfare, the unearned portion of the minimum wage is a tax on the economy. Other than from a “hair-on-fire” liberal, when was the last time you heard anyone claim tax increases benefit the economy?

The stated goal of minimum wage supporters is to improve the lot of “the poor.” (In truth, it’s an attempt to pander to a “victim group” to garner its votes.) In a closed economy, the best we could hope for from increasing the minimum wage would be a result akin to a dog chasing his tail. Indeed, the Democrat Caucus of the Pennsylvania House admits as much when it asserts, “Raising the minimum wage will help all workers, even well-paid workers, as the rising tide lifts all boats.” As soon as the ripple effect of the minimum wage works its way through the economy via job cuts, increased prices, et cetera, the people receiving the minimum wage will be back at square one.

We don’t have a closed economy, however. Commonsense tells us arbitrary costs imposed on goods and services by one region put that region at a competitive disadvantage. If that were not true, why wouldn’t all businesses ignore their competitors and charge as much as they wanted?

Below is a detailed critique of the subject editorial.

“Minimum wage debate is more about politics than it is economics

[RWC] This is how liberals like to cast the issue because they recognize economic laws, experience, and logic are not on their side.

“Raising the minimum wage would put Pennsylvania at a competitive disadvantage.

“Raising the minimum wage wouldn’t have any such effect.”

[RWC] To find this assertion credible requires us to accept the unbelievable, that labor costs and/or tax increases have little to no effect on the economy. If this assertion is true, why don’t minimum wage supporters eliminate poverty altogether and raise the minimum to $30/hour, or why not $50/hour?

What’s even more incredible is that some politicians like Gov. Rendell now actually claim increasing the minimum will increase employment! When was the last time that when a product’s price increased you chose to use more of it? Why do businesses constantly try to cut costs? Using Mr. Rendell’s logic, business should be increasing costs.

When minimum wage supporters trot out expert economists who claim good or no effects from increasing the minimum wage, consider the following analogy. If Albert Einstein had claimed the sky grows brighter as the Sun goes down at night, would you believe him?

“In the coming weeks and months, you’ll be hearing both sides make these arguments as Democrats and Gov. Ed Rendell push for an increase in the state’s $5.15-an-hour minimum wage.

“Under their proposal, the minimum wage would increase to $6.25 this year and $7.15 by 2007. After that, it would be followed by cost-of-living increases.”

[RWC] Don’t forget the additional 7.65% required to pay Medicare and Socialist Security taxes. If this were received by private business, we’d refer to this byproduct as a “windfall profit.”

“As expected, the proposal has met with gloom-and-doom predictions from the business community and Republicans, who control the Legislature. Business advocates say raising wages will force small business owners to increase prices or cut jobs.

“As was noted in an editorial last year, there’s not a lot of solid evidence one way or the other as to whether there is an upside or downside to increasing the minimum wage.

“Politics and ideology are driving this matter. What this is going to boil down to is whether Pennsylvania Democrats can bring enough election-year pressure on Republicans to enact an increase.”

[RWC] Ever notice how it’s liberals who usually claim, “There’s not a lot of solid evidence one way or the other?” The truth is, there’s plenty of evidence and logic to support opposition to any minimum wage. By claiming otherwise, liberals try to turn the issue into a moral choice. If Newton’s laws of motion ever become inconvenient to liberals, you can bet liberals will claim “there’s not a lot of solid evidence one way or the other as to whether” the laws are valid.

“Morally, it’s the right thing to do. The minimum wage has not even kept up with the rate of inflation.”

[RWC] When did it become moral to force an employer to pay an employee more than the economic value of his job? The difference between a minimum wage and the economic value of a job is nothing less than stealth welfare.

“Politically, though, it might prove to be a hard sell. Republicans control both chambers of the General Assembly by comfortable margins, and their key constituencies oppose the hike.”