Jewish World Review Nov. 5, 2003 / 10 Mar-Cheshvan, 5764
"Living wage" kills jobs
http://www.NewsAndOpinion.com | Give credit where credit is due. The political left is great with words. Conservatives have never been able to come up with such seductive phrases as the left mass produces.
While conservatives may talk about a need for "judicial restraint," liberals cry out for "social justice." If someone asks you why they should be in favor of judicial restraint, you have got to sit them down and go into a long explanation about constitutional government and its implications and prerequisites.
But "social justice"? No explanation needed. No definition. No facts. Everybody is for it. Do you want social injustice?
The latest verbal coup of the left is the phrase "a living wage." Who is so hard-hearted or mean-spirited that they do not want people to be able to make enough money to live on?
Unfortunately, the effort and talent that the left puts into coining great phrases is seldom put into facts or analysis. The living wage campaign shows that as well.
Just what is a living wage? It usually means enough income to support a family of four on one paycheck. This idea has swept through various communities, churches and academic institutions.
Facts have never yet caught up with this idea and analysis is lagging even farther behind.
First of all, do most low-wage workers actually have a family of four to support on one paycheck? According to a recent study by the Cato Institute, fewer than one out of five minimum wage workers has a family to support. These are usually young people just starting out.
So the premise is false from the beginning. But it is still a great phrase, and that is apparently what matters, considering all the politicians, academics and church groups who are stampeding all and sundry toward the living wage concept.
What the so-called living wage really amounts to is simply a local minimum wage policy requiring much higher pay rates than the federal minimum wage law. It's a new minimum wage.
Since there have been minimum wage laws for generations, not only in the United States, but in other countries around the world, you might think that we would want to look at what actually happens when such laws are enacted, as distinguished from what was hoped would happen.
Neither the advocates of this new minimum wage policy nor the media much less politicians show any interest whatsoever in facts about the consequences of minimum wage laws.
Most studies of minimum wage laws in countries around the world show that fewer people are employed at artificially higher wage rates. Moreover, unemployment falls disproportionately on lower skilled workers, younger and inexperienced workers, and workers from minority groups.
The new Cato Institute study cites data showing job losses in places where living wage laws have been imposed. This should not be the least bit surprising. Making anything more expensive almost invariably leads to fewer purchases. That includes labor.
While trying to solve a non-problem supporting families that don't exist, in most cases the living wage crusade creates a very real problem of low-skilled workers having trouble finding a job at all.
People in minimum wage jobs do not stay at the minimum wage permanently. Their pay increases as they accumulate experience and develop skills. It increases an average of 30 percent in just their first year of employment, according to the Cato Institute study. Other studies show that low-income people become average-income people in a few years and high-income people later in life.
All of this depends on their having a job in the first place, however. But the living wage kills jobs.
As imposed wage rates rise, so do job qualifications, so that less skilled or less experienced workers become "unemployable." Think about it. Every one of us would be "unemployable" if our pay rates were raised high enough.
I would love to believe that the Hoover Institution would continue to hire me if I demanded double my current salary. But you notice that I don't make any such demand. Third parties need to stop making such demands for other people. It is more important for people to have jobs than for busybodies to feel noble.
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JWR contributor Thomas Sowell, a fellow at the Hoover Institution, is author of several books, including his latest, "Controversial Essays." (Sales help fund JWR.)