Wednesday, June 21, 2006

A Lucid Moment

The Senate refused to raise the minimum wage today. The Democrats are going resorting to old tricks by pandering to the poor and proposing that the Federal minimum wage be raised $5.15 where it has been since 1997 to $7.25 per hour.

As you may know, the states are allowed to set their own minimum wages. Here in California, the minimum wage is $6.75 per hour. While it's true that it is difficult or impossible to live on that wage in California (or anywhere else), the minimum wage isn't supposed to pay enough to support a family.

The truth is, most jobs pay more than the minimum wage because market forces drive up wages. Those making minimum wage are mostly people who are just starting out in the work force.

Advocates of a higher minimum wage see those workers as a static pool and refer to them that way. They claim that minimum wage workers haven't had a raise in almost 10 years. Well excuse me, but if you've been working for minimum wage for 10 years, you've got some serious problems. A worker increases his marketability through skills and experience. Wages rise according to the value a worker brings to the employer. I have worked for minimum wage before but I don't have to do that now. I've worked for $3.35/hour and I've charged as much as $125/hour for technical services. Why was I able to do that? Because someone was willing to pay me that much for skills and experience I acquired.

Thomas Sowell contends:
The first federal minimum wage law, the Davis-Bacon Act of 1931, was passed in part explicitly to prevent black construction workers from "taking jobs" from white construction workers by working for lower wages. It was not meant to protect black workers from "exploitation" but to protect white workers from competition.
And who do the civil rights leaders complain are the biggest victims of unemployment? It continues to be the blacks. A higher minimum wage, tells employers that they might have to pay more for labor than they believe the market demands. They will either refuse to fill a position, raise prices to compensate for increased labor costs, reduce services and keep prices steady or compensate for the perceived loss in some other way. In the mean time, the least skilled workers are priced out of those jobs with employers opting to hire more skilled or experienced workers since they have to pay more anyway.

Oh, one more thing: Union wages are tied to the minimum wage laws. When the minimum wage goes up so do the wages of union workers across the board. That means that prices directly or indirectly are affected by the higher cost of union labor. In turn, that means that we are artificially paying more for goods and services because of an arbitrary minimum wage floor.

Aren't you happy that our government is here to help?