Minimum sense could defeat minimum wage hike

President Joe Biden, looking around at how to deal with COVID-19's assault on the economy, is pushing a program that would abet the assault. It would likely eliminate 1.3 million jobs over time, turn some full-time jobs into part-time jobs, raise prices for consumers, put some businesses out of business and depress entrepreneurial initiative in starting new businesses.

The issue is Biden's proposed $15 minimum wage that would offer benefits to millions at a significant cost to others, mainly the young and the poor. People cheer and politicians benefit while populist-style progressives pat themselves on the back for supposed compassion that gives the word a bad name. They are afflicted by the Robin Hood mentality — steal from the rich and give to the poor — although they are actually persecuting free markets and taking from the poor. They sadly have an accompanying conviction, namely that central planners are omniscient.

For instance, in deciding on a national minimum wage, the politicians and bureaucrats seem to assume they know more about all the businesses that would be affected than the individuals who actually run them. They seem to think profits can always take care of a significant wage boost with minimal hurt to owners deserving what they lose, end of story. As a matter of fact, many businesses will not be able to accommodate such a large hike from the current minimum of $7.25 an hour without desperate struggle or closing down.

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Other accommodating options would likely include laying off the least skilled, least experienced, least productive workers earning less than what Biden wants. Automation might then compensate, or possibly those in charge will reduce the overall size of the business or hang up on expansion ambitions.

Most minimum wage workers are young, low-skilled, just starting out and, according to some research estimates, most move on to more rewarding jobs within just a year. Once they and some others making less than the $15 are let go by certain businesses, their skills are not going to improve, and it won't be easy to find another job. Some who keep the jobs will work part-time instead of full-time.

It's already the case that we are in an ever increasing high-tech, automated society in which the least skilled suffer; the middle-aged white working class, with manufacturing jobs ever more robotic as one factor, has been killing itself off at the rate of 150,000 a year with suicide, alcohol and drugs. The less educated young are a high percentage of minimum-wage workers and stopping them at the start of the race could keep some from even reaching the finish line.

The new minimum wage could give us fewer businesses, too. The 1.3 million jobs that could be lost according to the bipartisan Capital Budget Office is a data-driven estimate. It's harder to estimate how many entrepreneurial ventures will be stymied by having to pay at least that much per job from the very start, but it will happen. Right now, owing to the pandemic and business shutdowns, 100,000 businesses have gone out of existence. Thousands more are teetering on the edge. Their collapse would be made more likely by a new, overreaching minimum wage. Frightening unemployment will have fewer fixes.

One alternative is to hike the minimum wage by less, say up to just $10, but it's a mistake in the first place to have national minimum wages because some states are prosperous and can take it while others are not. Therefore, state and local minimum wages make more sense. Making even more sense would be higher income tax credits — money given instead of taken — already boosting low incomes.

Biden is for this but could easily go up several notches while dropping some of his unworthy spendathon enthusiasms.

(COMMENT, BELOW)

Jay Ambrose
(TNS)

Jay Ambrose, formerly Washington director of editorial policy for Scripps Howard newspapers and the editor of dailies in El Paso, Texas, and Denver, is a columnist living in Colorado.