OP-EDS

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January 9, 2007

The Democrats’ silver bullet: Minimum wage hike for all

Is this really the best they can do? The Democrats’ silver bullet for America’s problems is…drum roll...raising the minimum wage! Nancy Pelosi has vowed to put minimum wage legislation to a vote in the “first 100 hours” of Congress. To compound the problem (isn’t this bi-partisanship cute?), President Bush has already agreed to sign the legislation. While minimum wage supporters unquestionably have workers’ best interests at heart—though, of course, Democrats have one eye on polls showing strong support for their position—increasing the federal minimum wage is not only contradictory to our founding fathers’ principals of federalism, but will hurt businesses and workers alike.

The 10th Amendment to the Constitution states, “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” Although the 10th Amendment is, for all intents and purposes, dead in America, the Supreme Court still pretends that Congress can only exercise the powers enumerated in the Constitution. However, in the case United States v. Lopez (1995), four justices claimed that a federal law creating a “gun-free zone” around schools was constitutional because of its supposed effect on “interstate commerce.” More recently in Gonzales v. Raich (2005), the Court allowed, for the very same reason, the federal government to regulate—i.e., criminalize—the use of medical marijuana, even if it is possessed, purchased, and used in only one state. These encroachments by the federal government must come to an end. Illinois recently raised its minimum wage to $7.50 an hour (effective in less than six months), making the proposed federal wage hike to $7.25 not particularly significant. More importantly, if the people of Illinois want a higher minimum wage, then they should elect people to the statehouses who will enact such laws. Why do people in, for example, Louisiana—which doesn’t have a minimum wage—have to lose liberty because people in Illinois, among other states, want the minimum wage? Finally, even supporters of the minimum wage should acknowledge that it should be different for each state. In Wyoming, $7.25 is a lot different than in New York. We do not need politicians in Washington telling us how to live when we have just as many here in Illinois who are more than happy to do the same.

Ironically, raising the minimum wage will undoubtedly hurt the teenagers and low-income workers it purports to help. One of the basic rules of economics is that price floors cause surpluses. A minimum wage is essentially a price floor: It sets a minimum price at which employers can “buy” others’ services. The minimum wage will increase the job pool to include people who otherwise wouldn’t be working; this group would be comprised mostly of teenagers who are still feeding off their parents’ generous teat. Many high school and college students who would otherwise choose not to work during the school year would be tempted to if guaranteed a higher wage. More alarmingly, as George Will recently claimed, “Raising the minimum wage predictably makes work more attractive relative to school for some teenagers, and raises the dropout rate. Two scholars report that in states that allow persons to leave school before 18, a 10 percent increase in the state minimum wage caused teenage school enrollment to drop two percent.”

Furthermore, a higher minimum wage will cause companies to cut jobs that they can no longer afford. For example, “baggers” at grocery stores are not necessary; when employers see that the detriment exceeds the reward for these jobs, they will simply get rid of them. Walter E. Williams, an economics professor at George Mason University, argues, “There is no fixed number of workers necessary to accomplish a given task. Employers might be able to substitute capital for labor such as using dishwashing machines instead of dishwashers, automatic elevators instead of elevator operators, self-service gasoline stations rather than full-service gasoline stations, online reservations rather than reservation clerks, or relocating their operation overseas.” Williams further points out that “increasing minimum wages will cause unemployment for some of them and deny job opportunities for others.” Williams is right; an increase in the minimum wage will eliminate both potential and existing jobs.

Finally, minimum wage advocates would have you believe that most minimum wage earners are parents who are trying to feed their children. In fact, as the U.S. Bureau of Labor Statistics reports, “63 percent of [the approximately 520,000] minimum wage workers receive raises within one year of employment, and only 15 percent still earn the minimum wage after three years. Furthermore, only 5.3 percent of minimum wage earners are from households below the official poverty line; 40 percent of minimum wage earners live in households with incomes $60,000 and higher; and, over 82 percent of minimum wage earners do not have dependents.” These statistics are staggering. For the hundreds and hundreds of people who the minimum wage will help, there are thousands and thousands who it will hurt.

During John Roberts’s confirmation hearing, Illinois’s Senator Dick Durbin asked him, “Would you restrict freedom in America or would you expand it?” The freedom to contract, or to give a service to someone for whatever agreed upon wage, has been around in America for longer than any of us has been alive. Well, Senator, will you vote to restrict freedom in America or to expand it?