Minimum wage: Taxation by Misrepresentation (American Thinker)

 

By Steve Baker

I know this is hard for our low-information citizens to understand -- so I'm going to keep this as simple as possible.
Your well-intentioned feelings about the minimum wage do not trump facts about the minimum wage!
Increasing the minimum wage does not benefit the very people it is intended to help. In fact, it is a basic economic truth that minimum wage increases reduce the number of jobs available to college-age workers; drastically reduces the number of positions available to high school-age entry-level employees; and, devastates the number of jobs available in minority communities.
Ironically, our first black President now proposes to force businesses to raise the minimum wage to $9 per hour -- which is a direct assault on black teen employment. Hovering around 40%, black teen unemployment is not only a staggering economic problem, it is also directly proportional to the high crime rates in those communities.
Black economists, Dr. Thomas Sowell and Dr. Walter Williams, have been sounding this alarm for decades. Does black 'leadership' or anyone else in the left wing of American politics heed the irrefutable data and tragic historical trends presented by these imminent economic professors? Of course not. And, especially not President Obama, who, in his State of the Union address characterized his proposal thusly:
"Tonight, let's declare that in the wealthiest nation on earth no one who works full time should have to live in poverty, and raise the minimum wage to $9 an hour."
Sounds good. Feels good, too. Right?
H. L. Mencken said, "There is always an easy solution to every human problem-neat, plausible, and wrong."
Mencken hit the President right between the eyes on this one. Increasing the minimum wage to $9 per hour not only does nothing to reduce poverty, it does in fact exacerbate the very condition it so deceptively avows to fix. Of course, since the left believes force is the solution to every problem, then why not pass a law making it a criminal offense for business to fire anyone over a mandatory wage increase?
(I'll give you a minute to think that one through.)
Done?
OK. If you believe forcing business to increase wages is a good idea, and you also think regulating or preventing layoffs is a viable solution, then why not pass another law requiring all businesses to increase their number of employees by a certain percentage? Unemployment, today, (if you believe the government's own numbers), is at roughly 8%. Why not require all businesses to increase their labor force by whatever percentage is necessary to eliminate unemployment, altogether?
Seriously! If mandatory wage increases are the right thing to do, and feels oh so good, can you imagine how good we'll all feel if government forces business owners to also increase their employee rolls?
(I'll give you another minute to ponder that one.)
Done?
Good. Now, as many have pointed out, why are we stopping at $9 per hour. Consider exactly what the president said Tuesday night:
". . . no one who works full time should have to live in poverty"
Solution?
". . . raise the minimum wage to $9 an hour."
Even the most ignorant among us knows that a fulltime minimum wage earner is not lifted out of poverty at $9 per hour. So, why not $10 per hour? $20? $100? Better yet -- in the spirit of "fair share" -- let's pass another law leveling the playing field for everyone -- so that all Americans earn the same wage, regardless of the industry-sector -- or the worker's education, experience, and work ethic? Isn't that exactly the good the mandatory minimum wage provides for society, taken to its ultimate end?
Well, even the most liberal CongressPerson knows that a minimum wage increase to $50 per hour will not eliminate poverty; will lead to higher unemployment; and will produce runaway inflation -- such that the cost of even a Big Mac will jump to at least $40 per sandwich.
Why do they know this? Because they know the market will quickly adjust to the new, artificially-imposed realities, just as it will shift and adjust in the same manner as the more moderate, feel-good increase to only $9. Why then is any increase so important to them, when they have at their fingertips the data that proves such an artificial market adjustment is actually detrimental to the economy and will result in the exact opposite of their stated goals?
Because...it benefits the politician.
The minimum wage laws have always been, and will always be a voting-buying scheme, tailored for and directed at the uneducated, logic-deprived, math-challenged, Ooo-that-feels-good voter. Further, because more layoffs are inevitable when the mandatory minimum wage is raised, it forces an even larger percentage of the population onto food stamps and other welfare programs -- creating the snowball effect of putting more people in the "dependency voter" class.
Consequently, which party do you think that strategy benefits most on election day? The Democrats, most certainly. But, it also leaves the GOP chasing their tails with the failed notion of "compassionate conservatism" and other such clap-trap -- and Republicans therefore inevitably respond, even if grudgingly, by supporting some sort of compromise increase. Net result? The progressives' strategy of incrementalism wins -- again. We lose more freedom, and we advance ever more closely to pure socialism.
Another irony of the minimum wage is that even though liberals are demonstrably on record as despising big business and those evil big corporations, it is the largest of these corporations that can best absorb these mandated increases and increased regulations. Guess who it hurts the most; who has the most difficulty complying; who has the most difficulty keeping their entry-level laborers when faced with federal intrusion into the free market? That's right: Your favorite neighborhood Mom & Pop shop. Your corner grocer. Your locally-owned farm. Your neighborhood bar. That row of family-owned shops in minority communities. They are the first forced into unwanted layoffs and price increases -- making it ever-more difficult to compete with Wal-Mart and other national chain stores.
How hard is it, for even the most undereducated voter to understand, that if the government forces business to pay 10-20% higher wages -- and then those businesses are forced to raise their prices for goods and services by 10-20% to cover their increased cost of doing business -- that NO ONE benefits from an increase in the minimum wage?
It's no secret that any forced wage increase is also a backdoor tax increase on the employer. The amount of the increase is actually 10-to-30% higher for the employer, who has to pay higher social security, unemployment and other taxes. Their only logical response? Layoffs and price increases.
This video offers a very simple example of what minimum wage increases really means to the worker. So simple, even a liberal can . . . well . . . maybe not. But, here it is:
http://youtu.be/7DS0XXFdyfI
In the mid-90's, when the unemployment rate, here in Raleigh, North Carolina, was just 1.5%, I recall seeing signs on Burger Kings and McDonald's drive thru windows advertising job availabilities for $10 per hour. A 2011 USA Today story reported that the McDonalds in Williston, North Dakota has to pay $15 per hour to attract entry-level workers. Why? Because the oil fields are paying $25-50 for low-skilled laborers, attracting the available labor pool away from traditional minimum wage jobs. Result? McDonalds is forced by the free market to adjust the wage, as necessary and dictated by the laws of supply and demand.
This past weekend I spent about 15 hours behind the steering wheel of my car. I listened to talk radio with hosts and guests offering perspectives from both the liberal and conservative camps on the minimum wage. I even heard a liberal economist openly admitting that the minimum wage was a backdoor, feel-good "redistribution" mechanism -- acknowledging that despite requisite layoffs; price increases; the fact that it hurts small businesses; increases teen unemployment; and also resulted in other "unintended consequences" -- the forced "redistribution" of wealth and profit was worth it as a "benefit to society as a whole."
In other words, it is a form of taxation by misrepresentation. It automatically results in price increases for goods and services, on everyone -- including the poor and middle class. And, it puts more people on the welfare rolls.
Well-intentioned feelings about the minimum wage do not trump the facts. Even the liberal economist I heard admitted the deleterious side-effects of each an increase. At the very least, minimum wage increases ultimately have zero net effect on poverty or real earnings, as the market always adjusts its cost structure to accommodate the artificially-imposed increases. Sure, the minimum wage earner is making more, but in a matter of days, weeks or months, everything the minimum wage earner is buying is more expensive. The true net effect? Ignorant people feel good, and politicians buy a few more votes.
Ultimately, the minimum wage is only a benefit to the agenda and ends of those who are progressively manipulating us toward socialism, and to those who use the tax code, entitlements and labor laws as a vote-buying scheme.

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