In these Days of Obama — hand-wringing, feckless and ineffectual — even the wonkiest economic issue is infected with moralizing, business-bashing and political correctness.
If you question the fear-mongering of climate-change alarmists, you are a “denier.” If you oppose extended payments for jobless benefits, you are heartless (despite clear evidence that it makes unemployment worse not better).
And now, you are elitist if you oppose efforts to have the feds force businesses to pay out a ridiculous 40% raise in the minimum wage for their lowest workers. Because . . . it’s just the right thing to do!
It isn’t the right thing to do—it is, instead, a cynical, pandering patronage ploy by Democratic populists who should know better (and probably do). Worse, this wrongheaded policy push consumes center stage when we would do better to focus on other methods that would yield better results, such as new tax cuts on overseas profit repatriation.
I lamented this in a “What’s Bugging Me” segment on my last day on FoxBiz, here: Raising the minimum wage: Real fix or political posturing?
Some cold hard facts & stats:
- Only 3.5M-to-4M people are on minimum wage, half are under age 25. They typically move up into a higher-paying job after a year or so. This won’t pare the wealth gap that so obsesses O.
- Raising it from $7.25 to $10.10, as President Obama has just done by fiat for federal contract workers, would lead businesses to cut half a million jobs, non-partisan CBO forecasts say.
- In Europe, countries with a minimum-wage law have a youth-unemployment rate of almost 30%, sharply higher than the 20%-or-less rate of nations with no minimum wage. Still more proof.
- But why stop there? The New York Times says ten bucks isn’t enough! In Seattle, where the state minimum wage of $9.32 an hour is the highest in the nation, protestors are picketing McDonald’s joints demanding $15. For shoveling fries.
- We always hear wages are stagnant. Measured by the government’s Consumer Price Index, wages are up less than 6% since 1964, adjusted for inflation. But that excludes benefits for health care, insurance and other perks. Total comp is up 45% since 1964 when those perks are counted, according to research at Troy University.
- Measured by what money can buy, average hourly wages since 1964 have risen 35%, not just 5.6% as government data contend. And total compensation by this metric is up almost 90%.
- In 1959 an average worker had to toil for a hundred hours to earn enough to purchase a washing machine. Today that’s down to just 23 hours, the American Enterprise Institute finds. A TV cost 128 hours of work in ’59, and is down to less than 21 hours today.
Yet raising the minimum wage is the main economic arrow in the quiver of President Obama, our own latter-day Robin Hood.
The reason average wages aren’t higher isn’t because the minimum wage is too low—it’s because economic growth is too slack. And we still are reeling from the paroxysms of a tectonic shift from an industrial economy that made “things” (cars, aircraft, bulldozers) to a digital knowledge economy that zaps around bits.
We aren’t creating enough better, higher-paying jobs. Instead of clearing the way for businesses to expand and invest, our government resorts to stick-not-carrot. Gee, why bother trying to coax companies with tax breaks for training and factory expansion in struggling neighborhoods—better to tighten loopholes and force higher tax payments and ride herd over them as if they were out to screw us.
Why not work on that problem—the real one?