Saturday, December 02, 2006

Raise this!

Here in Iowa the Democrats have retaken the legislature in Des Moines, just as they have in D.C., and at both levels they have promised to raise the minimum wage. Currently the national minimum is $5.15 an hour. I believe $7.25 is the new figure that at least some of the Dems are kicking around. I didn’t want to have to write about the minimum wage because , like most Americans, economics kind of bores me. But our local Iowa media have been running stories on the subject that have been about as balanced as Teddy Kennedy on his way from the pub to his car. So, since the news media aren’t even going to feign objectivity and instead resume their familiar role as cheerleaders for the new Democrat majorities, here goes:

Of course the big reason to oppose raising at least the federal minimum wage (or even having one at all) is because the federal government has no Constitutional authority to impose one. The first minimum wage was established in 1933 as part of the FDR’s “National Industrial Recovery Act.” Two years later the Supreme Court declared the act unconstitutional, abolishing the minimum wage in Schechter Poultry Corp. v. U.S. But FDR and the New Deal Democrats weren’t about to let a little thing like the U.S. Constitution get in their way. They reauthorized the minimum wage and the Supreme Court, cowed by FDR’s threat to “pack the court” with new appointees, later reversed its own ruling. While the Supreme Court may waffle before a tyrannical president, the Constitution does not. It gives Congress NO power to set wage and price controls of any kind. Period.

That is probably not an effective argument these days, after the neo-con Republicans have helped the Dems throw the last few spades full of dirt on the 10th Amendment’s shallow grave, so let me try another. Raising the minimum wage will not help the nation’s working poor. I could argue that if the Dems truly wanted to help the working poor they should raise the minimum wage not to $7.25 but to $15.47 an hour (a nice arbitrary number, just like they like).

Even supporters of raising the minimum wage could deduce that at $15.47 an hour many small businesses, and even many large ones, would feel a hit on their bottom line. Business would therefore have to either hire fewer workers (which would hurt the working poor), lay off some workers (which would hurt the working poor), outsource more work overseas (which would hurt the working poor), and/or raise their prices (which would hurt all consumers including… the working poor). Even if a minimum wage earner was able to find a job and keep it after the wage goes up, the prices he has to pay for every good and service he buys would go up. Therefore the purchasing power of his new wage would end up being pretty similar to what it was before his big “raise,” rendering the whole exercise pointless. If that logic is true at $15.47 and we begin to look back down the pay scale, perhaps one of you Democrats can tell me at what exact dollar amount that logic ceases to exist.

Also, to use a well-worn quote from the left, “for the good of the children” we shouldn’t raise the minimum wage. According to the Department of Labor, individuals between the ages of 16 and 24 accounted for 53 percent of all minimum wage-earners in 2005. David Neumark, professor of economics at Michigan State University, and William Wascher, a researcher with the Federal Reserve, found that increasing the minimum wage decreases the proportion of teenagers enrolled in school, as the higher wage makes leaving school appear more attractive. Throughout their lives these new dropouts will earn lower wages than their classmates who stayed in school. I guess in the Democrats eyes that’s probably a good thing. It will create more working poor that the Dems can “help,” in exchange for a vote of course.

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