Well I started this blog as a self-expression on the issues of the day and what have you. I haven’t posted anything since the day after I started the blog. Not exactly a great track record of staying current with current events. And no one seems to be noticing.

But I do have a fan of sorts, and this person’s been bugging me about posting again, and I have to admit I really appreciate the interest. I wasn’t sure once I started whether anyone would really care or not whether I continued it. I knew my family would care, of course, but they haven’t exactly been wearing out the ringer on my cell phone with questions about when I’m going to post again either. But this friend of many, many years (and of many, many experiences which are not fit for posting) is asking, so here goes – for him and for anyone else who may care.

I’m going to link to a couple of articles today on the current debate in Congress on an increase in the federal minimum wage. According to Reuters, the House of Representatives voted 230-180 to raise the $5.15-per-hour minimum wage in three 70-cent steps until it reaches $7.25 in mid-2009. (I have several problems with the article’s incomplete reporting on this, which I don’t have time to go into now – read the whole thing to see for yourself). The article notes that the bill has less of a chance in the Senate, one reason being that Republicans have tied a cut in the estate (death) tax, which Democrats bitterly oppose.

The minimum wage is an emotional issue at best, and is used by liberals and Democrats in Congress (but I repeat myself) as a class-envy and class-warfare tool. Study after study details the harmful affects of the minimum wage. It actually hurts the people it purports to help, and one way it does so is actually to move people up in the earnings brackets, reducing the amount of welfare benefits they may receive and lowering their standard of living. It also hurts small businesses, kills job creation, and forces businesses to pay more than the skill set a person brings to the marketplace is worth. If Democrats were really interested in the little guy, they would focus on ways to generate economic activity (which Bush’s tax cuts have done, which Democrats also oppose and want to repeal).

Over at The Heritage Foundation website, Michael Franc writes in more detail on the subject. Please read the whole thing; it’s fairly illuminating. One of the enduring myths about minimum wage earners is that they are comprised entirely of adults trying to raise children in poverty. He points out several key items that refute this:

“While some minimum-wage workers are primary breadwinners raising young children, the overwhelming majority are either younger workers honing their skills in entry-level positions or part-time, mostly female workers from middle-class homes supplementing their spouse’s income.

• Only 1.9 million American workers (out of a total workforce of 127.4 million) earn the minimum wage. Most (63%) are women. More than half (53%) are between the ages of 16 and 24, and an even larger percentage (58%) work part-time.
• Upward mobility is the happy norm. Two out of three of today’s minimum-wage workers will earn 10% more within a year.
• Many are teenagers who live with their parents in middle-class homes. This explains why the average household income for minimum-wage earners is more than $40,000 a year and why only 19% (about 400,000 nationwide) fall below the poverty line.”
  

There are families, of course, who do fall into the category or working multiple jobs at minimum wages just to feed and clothe their families. Senator Kennedy of Massachusetts, a class warfare warrior if there ever was one, uses these situations as justification for raising the minimum wage. However, Mr. Franc points out that in the State of Massachusetts,

“The researchers uncovered the dirty little secret of the welfare state. For example, a family of four in Kennedy’s Massachusetts earning $13,000 is eligible for a theoretical maximum package of benefits totaling an additional—hold on to your hats—$31,500, bringing its total income to $44,500.

Specifically, that Massachusetts family could receive $6,500 in cash assistance from TANF, an earned income tax credit worth $4,400, $2,172 in Food Stamps, $275 worth of school lunches, $5,700 in housing vouchers, $6,000 in child-care subsidies and $6,460 in Medicaid. The unintended consequence: As a family increases its earned income, it actually falls further because of the way welfare benefits decline as incomes rise. For example, for each additional $1,000 it earns, the family could lose up to 30% of its Food Stamps and housing voucher.

So what about that minimum-wage earner that Kennedy and his allies want to elevate above poverty?

A family of four with an annual household income of $11,000 (equivalent to what a full-time minimum-wage job yields) could qualify for $33,000 in supplemental welfare benefits. Kennedy’s plan would, assuming no loss of employment, boost that family’s yearly paycheck to $15,000. But, due to the way benefits phase out as incomes rise, that family’s benefit package would decline by $7,000. Thus, total annual income—earned income plus welfare benefits—would actually fall by $3,000. Surely, reducing welfare assistance to half a million working poor families isn’t what the senator from Massachusetts had in mind.”
 

Mr. Franc uses the minimum wage debate to point out all the disincentives for work that our government continues to provide, despite the welfare reforms of 1996. In my mind, however, the minimum wage issue is one of free markets versus government intervention. Once politicians start interfering with free markets, no matter how well intentioned, the results are usually opposite of the intent (Witness the much bally-hooed luxury tax, a class-envy tax levied by Democrats, which ended up hurting blue-collar workers because people stopped buying new luxury items to avoid the punitive tax. Congress quietly repealed the tax a few years later). With the minimum wage, supporters attempt to make a moral argument, stating that it’s a moral imperative that the government set an economic standard, which they’re basically pulling out of thin air. So now you have politicians, no bastion of moral standards themselves, making moral economic standards for which they’ve had little education. Once you have politicians doing that, and people start feeling that they’re victims of free markets instead of participants in them, you begin to slide down a slippery slope of more and more government intervention aimed at creating a social state model. One only needs to look at Europe, and especially France, to see where that leads.

Further, wages are subject to the laws of supply and demand. With the economy keeping a full head of steam, good workers are getting harder and harder to find. If the supply is low, then wages will increase in an effort to attract and retain the best workers. This applies at the entry level position as well. Driving around Albuquerque, there are help-wanted signs everywhere. Many signs also include the starting pay scale, well above the minimum wage. Businesses in a hot economy need workers, and they will pay more to get them if they have to. Otherwise their business will suffer. Businesses have to compete for labor in the same way they have to compete for customers.

My oldest daughter Mallory recently got a job at a restaurant as a hostess. This restaurant also uses hostesses to bus and clean tables. She was paid minimum wage while she was in training, then immediately received a good raise upon completion of training. The restaurant could easily pay minimum wage for the job, but realizes the value and productivity gains of having the hostesses perform double duty, and pays them more to recognize that value. Having the government decide what value an employee is to a business is unnecessary interference that places a drag on the economic engines of this great country. Why would they want to do that?

Although millions have gotten their career start, whether as a teen-ager or adult, at the minimum wage level, no one requires that they stay there. It’s up to individuals to study, work hard, or do whatever they need to do to increase their upward mobility. No one’s going to do it for them.