Today’s Guest Saturday post comes to us from Pat Slattery of The Free Market Project blog. Pat first published this essay on November 9, 2013.
Why do Democrats want to raise the minimum wage?
The Democrats are at it again: Trying to raise the minimum wage, this time to $10 per hour.
Why? This time, I think it’s a distraction. It gives them a chance to vilify Republicans, who will oppose raising the wage.
Things are going bad for the Democrats right now. Obamacare is turning out to be the disaster that anyone with half a brain knew it would be. The website doesn’t work and isn’t secure. But that’s the least of the problems. In fact, I wish people would stop talking about it. The bigger issue is the policy cancellations, and, surprise surprise, the fact that the insurance offered by Obamacare is more expensive with higher deductibles. Interestingly, you can’t force people to buy broader coverage (far broader than they may need or want) and not have the price go up. You can’t cover older people and people with pre-existing conditions and not charge those people more for their policies unless you charge the young and healthy more for their policies. Shocking, huh? You can’t give some people subsidies for their insurance without getting that money from the policies of the un-subsidized. Why is this hard to understand?
What is going to happen when people, even people who got subsidized, figure out that a policy with a really high deductible (which is all that I’m hearing about) is so very much like having no insurance at all? Will it matter that you got your insurance subsidized so the cost won’t break you when you then have to use that insurance and the deductible breaks you anyway?
Also, the economy still sucks. You hear Democrats crowing about the stock market (as though the prices on NASDAQ actually reflect the experience of the average person in the economy), while trying really hard to ignore the number of people who have dropped out of the workforce, and absolutely turning a blind eye to things like the rise in people getting disability. QE is causing the market to stay high. The money being manufactured is sitting in the hands of the very people that the Democrats love to vilify (and accuse of being Republicans!) in a very weird and shady crony payoff (it seems to me). But, down here on the ground, wages are stagnant and jobs are scarce and the little guy is having an extremely difficult time bettering his lot in life.
So… Given that conservatives were right about Obamacare and the O’conomy, the Democrats need something to vilify them with. You see, if conservative, free market capitalist answers were utilized rather than progressive answers to health care and economic problems, things would be better now instead of worse. Perhaps the poverty rate would not be sky high and rising. Maybe the minority unemployment rate would be falling instead of at incredibly high numbers. There’s even a chance that young people coming out of school could find work, or create companies, instead of being unemployed at the same time that the government is demanding that they buy expensive insurance they can’t afford on top of their expensive student loans they can’t pay off.
How do you vilify Republicans? You propose something that sounds good to a lot of people who don’t understand a damned thing about economics. It has to be something that absolutely reeks of compassion for the poor, whether it does anything positive for the poor or not, or even if it actually makes the problems of the poor worse. You propose a raise in the minimum wage! Economic morons love that one.
I hardly need to explain why a raise in the minimum wage is damaging to anyone who would come to a website titled “The Free Market Project”, but in case a liberal/progressive stumbles onto this site, I will give the short version (any liberal/progressive that wants a more thorough treatment can Google “Thomas Sowell minimum wage” and get a lot more information). I’ll start with something simple: If you make something more expensive (especially without raising the quality) do people buy more of it, or less of it? The answer is “less,” in case you don’t know. So, while some workers will benefit from a raise in the minimum wage, many will lose their jobs, and many more will not be hired in the first place. Second, (this is a point Thomas Sowell makes very eloquently and backs up with great evidence collected by the IRS) while people talk about a “living wage” the truth is that minimum wage jobs tend to be starter jobs. They are where young people (primarily) and others go to gain a foothold in the job market. They are the first rung of the ladder. Very few people who start in a minimum wage job stay in a minimum wage job. Even if they stay with the same company, as they increase their skills and knowledge (as they become more productive and valuable to the company) their pay increases. Some jobs are just resume’ builders–the proof to a future employer that you can show up for work when asked, learn how to do a job, and do it at an acceptable level. If minimum wage is increased and employers hire fewer people, that means fewer people get their foot on that rung. Minimum wage jobs are not “career” jobs. If someone is making a career out of a minimum wage job (this has to be a REALLY small minority of workers, though I don’t have the stat) they can’t be particularly ambitious in the first place. If that is the only type of job available, shouldn’t you be looking to things that are a drag on the economy (ahem… like government policies) that prevent good paying jobs from being created, rather than trying to make employers pay workers more by force? And, speaking of employers, how does the government figure that they can raise a cost (and this is a particularly large cost increase we are talking about, since it raises the cost of employing a minimum wage worker over $2 per hour) without the employer having to figure out a way to compensate for that increase in cost? Of course they will. Raising the cost of labor does not result in extra money to pay that higher cost simply fall from the sky. So what are the options for the employer (many of whom actually work on tight margins)? Employ fewer people (causing unemployment to rise), go out of business (causing unemployment to rise), or raise prices, which gets you into a tricky situation where the poor people you were trying to help with raising the minimum wage are now paying more for what they buy (as is everyone else) which means that the increase in wages are actually washed out, and the poor suckers who thought the minimum wage raise was a good idea but now they can’t get a job are really screwed because what little money they could get now has less buying power. It’s a bad f-in’ idea.
The economically ignorant “deeply compassionate” and the poor are once again being used by the Democrats to try to do political damage to the Republicans. The proposal (increasing the minimum wage) will actually damage the poor. This isn’t a theory, this is backed up by facts. The only reason I can think of to do it is to try to distract from the Democrats’ own disastrous policy results to focus on how mean Republicans (conservatives) are to the poor. (And there are many more of them as a result of Democrat policies!)
Note: One of the other reasons for raising the minimum wage is a payoff to labor unions, who often have as a part of their contracts, especially with the government, that union labor will be paid some multiplier of minimum wage.