Among the issues most commonly discussed are individuality, the rights of the individual, the limits of legitimate government, morality, history, economics, government policy, science, business, education, health care, energy, and man-made global warming evaluations. My posts are aimed at thinking, intelligent individuals, whose comments are very welcome.

"No matter how vast your knowledge or how modest, it is your own mind that has to acquire it." Ayn Rand

18 July 2009

The Federal Minimum Wage Increase

In the midst of the worst recession in several decades, the federal government is about to carry out the third stage of a federal minimum wage increase from $5.15/hour to $7.25/hour on 24 July. In July 2007, it was increased to $5.85 and in July 2008 it was increased to $6.55. These minimum wage increases will contribute further to the unemployment which in June rose to 9.5% of the workforce. Why does the federal government interfere with the employment contract between a worker and an employer in such a manner? For that matter, why do many states also establish minimum wage rates by law?

Nannies argue such things as: A family of four cannot possibly be supported by a single wage earner being paid $5.15/hour so government must step in and force the employer to pay its workers more. Implicit in this argument, there is an assessment of the cost-of-living according to some standard held by the nanny and there is a failure to note the individual nature of the employee and the job in which he is employed. The employee may not have graduated from high school and if he did, he still may not know how to read or add and subtract numbers. The employee may not have an IQ of 100 or more, so his abilities may not be those that most voters imagine the employee may have. And, of course, the employee may have other means of support and just wants a few more spending dollars, or he may be looking for a good job, but needs whatever supplemental income he can get in the interim.

Then again, the employee may live in a community where the cost-of-living is very much lower than it is where the plurality of voters who favor a given minimum wage come from. Or, frankly, someone who wants a particular job in a particular industry may simply have to take what that industry can afford to pay in that area of the country. A lemonaide stand operated in New York City may be able to generate much more income per hour than one operated in Lance Creek, Wyoming. The lemonade stand in NYC may be able to pay $7.25/hour to the lemonade dispenser, while this may be a hopeless prospect in Lance Creek.

If there were a valid justification for government to interfere with the freedom of employment, it is clear that any minimum wage laws that might be justified should be established on as local a level as possible. Even when these are established at the state level, there will be huge cost-of-living differences across many states and great differences in the kinds of jobs available and the customers who will provide the income to the company providing the jobs. Lemonade stands in Cheyenne, Casper, and Yellowstone National Park may be able to generate much more income and pay higher wages than can one in Lance Creek. This is no reason to deny the people of Lance Creek jobs at a lemonade stand and lemonade as well! Yet, the many states with minimum wage laws do just such nonsensical things. Then we compound this extreme nonsense with the still more ridiculous nonsense of a national minimum wage law.

Why do we do this? Well, it clearly is not to address any actual concern for fairness to employees, since if such arguments as that they were unfairly treated by the free market forces of supply and demand were actually true, then these issues would have to be addressed by very local governments which could more nearly deal with the many different local conditions. I maintain that they should not attempt to do this because it violates the rights of both the employer and the employee, but even for those who have no concern for rights and moral behavior, but who do pretend to be pragmatic, the argument for a national minimum wage rests on quicksand.

The real reason for a national minimum wage law, and in many cases for state minimum wage laws, is so local governments can minimize the tendency of some businesses to locate in areas where the cost of living is lower. The high-cost-of-living states and locales are commonly suffering an out-migration of people and businesses to lower cost-of-living areas or at least they have slower growth rates. The governments have a particular interest in stopping this out-migration because in many cases they have had a major hand in increasing the cost-of-living in their areas. The areas with the higher cost-of-living, higher taxes, greater restrictions on business operations and new home building, tend to be dominated by the Democrat Party. These areas also tend to have higher population densities, which make it easier to pay service workers more than they can make in lower population density areas of the country. So, establishing a federal minimum wage requirement which is higher than the level at which some people in some parts of the country are willing to work in certain jobs, kills the competitive industries or retards their competition in those areas of the country.

In practical terms, the recent increases in the minimum wage retard the growth of companies in the South and in the Plains States and outside many metropolitan areas of the remaining states, in addition to eliminating jobs for many of the least skilled, commonly very young, workers in the many metropolitan areas where the city public school systems are a horrifying joke. This is an act of unbridled cruelty, dressed up as nanny compassion. This is the wolf under a sheep hide.

Once again, the progressive agenda is simply a transfer of wealth, jobs, and dreams from those with less political power to those with more political power. The big push for these federal minimum wage increases came from Pelosi (D, CA), House Education and Labor Committee Chairman George Miller (D, CA), and Kennedy (D, MA). In this case, it is clear that the Blue States are taking advantage of the Red States in an effort to keep the Red States from taking advantage of their lower cost-of-living, lower taxes, and better business climates. It is also clear that despite the great pretense, the Progressives do not care a fig for those they have not bothered to educate decently in their public schools in the many major cities controlled by the Democrats or for jobs lost to people who are less likely to vote for them. Furthermore, it is clear that whether people actually have jobs or not is much less important to the Progressives than is their quest for the power to control all of our lives from cradle to grave.

Let us all give a great big hand to the fascist Democrat Party which once again is destroying American jobs and hurting those with minimal jobs skills or opportunities, even as they continue the pretense of caring for the Little Guy, the Common Man, and the Disadvantaged. Once again, it is revealed that the Party of Mass Destruction is primarily motivated by a lust for power rather than a caring heart.

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