Clicking on banner ads keeps JWR alive
Jewish World ReviewSept. 20, 1999/10 Tishrei, 5760

Larry Elder

Larry Elder
JWR's Pundits
World Editorial
Cartoon Showcase

Mallard Fillmore

Suzanne Fields
Arianna Huffington
Tony Snow
Michael Barone
Michael Medved
Lawrence Kudlow
Greg Crosby
Kathleen Parker
Dr. Laura
Debbie Schlussel
Michael Kelly
Bob Greene
Michelle Malkin
Paul Greenberg
MUGGER
David Limbaugh
David Corn
Marianne Jennings
Sam Schulman
Philip Weiss
Mort Zuckerman
Chris Matthews
Nat Hentoff
Larry Elder
Cal Thomas
Jonathan S. Tobin
Don Feder
Linda Chavez
Mona Charen
Thomas Sowell
Walter Williams
Ben Wattenberg
Bruce Williams
Dr. Peter Gott
Consumer Reports
Weekly Standard

Econophone

Minimum wage, maximum stupidity

http://www.jewishworldreview.com -- WARNING: OVER CERTAIN ISSUES, otherwise intelligent people may, repeat, may suffer instantaneous, and often irreversible, brain-freeze.

Take the minimum wage. The City Council in Santa Monica, Calif., a town also known as "Moscow on the Pacific," just voted unanimously to consider a minimum wage of $10.69 an hour. Plus benefits!

California's $5.75 hourly minimum wage already exceeds the federal rate.

Not enough, according to Santa Monica Councilman Michael Feinstein, "Trickle-down economics don't work. They're violent to people." And an activist with something called "Santa Monicans Allied for Responsible Tourism" blasted the hotel industry for failing to increase the wages of its workers. "Those people we are seeking to help are already hurting. It's time for Santa Monica to get on the living-wage bandwagon."

Santa Monica, decades ago, passed extremely stringent rent-control laws.

The effect? An increase in homelessness, a disincentive to create new housing, and a greater rental population percentage of middle- and upper-class residents, crowding out people lacking the guile or contacts to finagle a below-market apartment. An old story. The poor and blue-collar workers, whom the rent-control laws presumably intended to help, suffered the most.

This same logic applies to minimum wage: One interferes with the free market at one's own peril.

A recent editorial in "Investors Business Daily" put it this way:

"Minimum-wage laws, an icon of the political left, are particularly damaging to low-income workers. Many are locked out of jobs. The Employment Policies Institute figures that the first 50 cents out of the $1 hike in the minimum wage in 1996 through 1997 cost 645,000 jobs."

If the simple waving of a minimum-wage wand cures poverty, why set the rate at $10 an hour? Why not make it $50 an hour? At $50 an hour, everybody makes at least $100,000 a year!

Rarely do economists agree on any given issue. But here, however, almost all economists agree: Minimum-wage hikes destroy jobs. And they hurt the very people that the victicrats purport to help -- women, minorities and teens. Most minimum-wage workers are not heads of households, attempting to raise a family on $5.75 an hour.

But suppose that the typical minimum-wage earner were a married man with a two-child family. Can we agree that one should defer producing a child until one can feed, clothe and educate that child? Shouldn't a minimum-wage person have a minimum family, at least until skills, and therefore, future prospects, improve?

Recently, a major newspaper ran an article bemoaning rising rents and how this affected a particular "working poor" family, a family, mind you, that includes three children. The husband holds down a minimum-wage job as a chef-assistant, and his wife works as an Avon saleswoman and baby-sitter. Three kids? What's the bare-bones cost to raise one child in this country?

Depending upon the local cost of living, the price tag probably averages about $10,000 a year for one child.

Newspapers often write sympathetically about the travails of a poor family getting by on a husband's minimum wage. Never mind the mom-and-pop hot-dog stand, with a couple of minimum-wage workers, scratching out a living against tremendous competition. A Santa Monica dentist said of the proposed $10.69 minimum wage hike, "This isn't a living wage; this is a death wage."

And a Santa Monica hotel manager said, "People making $10.69 an hour will be happy at first, but then, they'll realize the work they're doing is for two or three people."

A recent "Investors Business Daily" article explained how minimum-wage hikes kill jobs, "It's clear to everyone but the most die-hard socialists how this happens. Employers who can afford to pay four workers $5.00 an hour can't afford them all at $6.00 an hour. Somebody has to go. So, three are marginally helped -- a fourth is simply without a job. And the fifth, sixth and seventh don't get hired in the first place."

Is it possible for so many people who support the minimum wage to be so wrong? A recent Montreal Expos-San Diego Padres baseball game perhaps provides an explanation. With San Diego batting, Montreal recorded three outs, and should have headed towards the dugout. But the apparently brain-frozen Expos remained in the field, and the next Padre batter ran the pitching count to 2 and 1 before somebody woke up. Montreal should be especially embarrassed, since the umpire's gaffe stood to cost them more.

Sixteen-thousand people attended the game, yet, the home team, the visiting team, the umps and the fans all sat, nobody screaming, "Wait a second. There are already three outs!"

As to the minimum wage, its damage is documented, the lack of beneficial effect well-known among economists. How, then, can so many otherwise normal, intelligent people be so wrong? Ask the Montreal Expos. It happens.


JWR contributor Larry Elder reads all of his mail. Let him know what you think by clicking here.

Larry Elder Archives


Up
©1999, Creators Syndicate