When You Think All Backbone Is Lost

The Republicans go and do something right:

Bid to increase minimum wage nixed

WASHINGTON (AP) — The Republican-controlled Senate refused Wednesday to raise the minimum wage, rejecting an election-year proposal from Democrats for the first increase in nearly a decade.

The vote was 52-46, eight short of the 60 needed.

“I don’t think the Republicans get it,” said Sen. Edward M. Kennedy, D-Massachusetts, who backed a proposal for a three-step increase in the current wage floor to $7.25 an hour. The federal minimum wage has been fixed at $5.15 an hour since 1997.

Republican critics said the minimum wage was a job killer, not the boon to low-wage workers portrayed by Democrats.

“This is a classic debate between two different philosophies. One philosophy believes in the marketplace, competition and entrepreneurship, and the second is a philosophy that says government knows best,” said Sen. Johnny Isakson, R-Georgia. He said France and Germany have high minimum wages but also high unemployment.

But Kennedy and other advocates of an increase said minimum wage workers have been without a raise since 1997.

Underscoring the political context of the debate, he said if Democrats win the Senate this November, a minimum wage increase will be one of the first pieces of legislation to be considered.

Copyright 2006 Reuters. All rights reserved.This material may not be published, broadcast, rewritten, or redistributed.

Isn’t it telling how Georgia Senator Johnny Isakson listed factual, empirical reasons to be against the minimum wage yet Kennedy and ‘other advocates’ dodged his argument and simply reiterated their point? The reason is that the economics of the minimum wage are clearly on the Republican side, yet Democrats know that many voters are economically ignorant, so they would rather play on that ignorance for more political votes, even though playing on that ignorance results in more job losses and a lower standard of living for those very voters.

The reason that the minimum wage is one of the last few remaining price controls is precisely because it carries so much political support, even though its results are clearly opposite of what the voters intend. For more on how the minimum wage harms workers, and especially low skilled minority workers, go here, here, here and here.

17 Responses to “When You Think All Backbone Is Lost”

  1. L. Diablo says:

    I just subscribed to your blog’s RSS feed (I’m a Sowell and Norberg enthusiast.)

    I love this post! I’m sending it to a few friends. It is a typical example of the left favoring appearances over reality… Here is a comment on a related example (taxation):

    “At some point, those on the left must decide what really matters to them—the appearance of soaking the rich by imposing high statutory tax rates that may cause actual tax payments by the wealthy to fall, or lower rates that may bring in more revenue that can pay for government programs to aid the poor? Sadly, the left nearly always votes for appearances over reality, favoring high rates that bring in little revenue even when lower rates would bring in more.”

    ( from Bruce Bartlett’s December 2005 article Who Pays the Taxes, available at townhall.com.)


  2. Jon says:

    It is absolutely appearances over reality for libs. Who suffers when minimum wage is increased? It’s not people with skills that make good money. It’s the poorest of the poor.

    Imagine you lack skills or ability. Imagine you are missing an arm or something. You go to the factory and say “Give me a job.” But you aren’t worth $5.15. You don’t produce that much during your work because of your disability. So you say “Screw it. Pay me $3 an hour. I’m not worth as much as a person wtih two arms, but I’ll become better. I’ll find a niche and develop skills. Then I’ll move into a role that is worth more to you and I’ll be able to demand more money.” That could really happen. In the libs world that can’t happen. You are stuck. You will never get a job and develop skills. Because the government cannot allow such a transaction to occur.

    The libs are so concerned about “freedom of choice” but when two free people come together and decide on a wage libs run in and disallow it. In denying free choice they punish the most vulnerable and poor in our society.

  3. Free Lib says:

    I don’t think the Republicans get it and I don’t think you guys get it either. Beyond the obligatory “I-worked-in-fast-food-when-I-was-a teenager” experience, has anyone in this forum ever tried living on a minimum wage? I have. And I know quite a few people that could really use a 2 dollar raise. Try telling them that their measly 2 dollar raise (conveniently distributed over three steps) will actually end up hurting them. They will rightly look at you like you are stupid.
    But fuck it, the poor ain’t really that poor anyway. Most of them have air conditioning and would probably spend those two dollars on caramel macchiatos and clove cigarettes anyway, right?
    However valid you feel your “data” is towards supporting your contention that increasing the minimum wage “hurts the poorest”, it is hardly fair (and frankly, a bit asshole-ish) to characterize an increase in minimum wage as a curse rather than a blessing.
    Appearances, you say? Yes; Republicans appear to be jerks.

  4. L. Diablillo says:

    Here’s a few interesting quotes about the minimum wage. The first deals with the curse vs. blessing issue, the second, with the logic of the case in favor of the minimum wage.

    Paul Samuelson, the first American winner of the Nobel prize in economics, put it succinctly back in the 1960s, when analyzing a proposal to raise the minimum wage to $2 an hour: “What good does it do a black youth to know that an employer must pay him $2 an hour if the fact that he must be paid that amount is what keeps him from getting a job?”

    (Taken from David R. Henderson’s Minimum Wage, Minimum Sense , in The Wall Street Journal, February 25, 2006)

    In some states, liberal groups are pushing living wage laws at $10, $12, and even $15 an hour. And why not? If you really believe a wage floor doesn’t affect employment, then why stop even at $15? Surely everyone would be able to live better on $60 an hour, or $100.

    (Taken from The WSJ Editorial Board’s Wages of Politics , in The Wall Street Journal, March 28, 2006)

  5. Free Lib,

    But that is the problem with your analysis – most people on the minimum wage are college kids who are in a transitional stage of their lives.

    Nobody is arguing that the few extra dollars the person making the minimum wage gets is ‘meaningless’, what we are arguing is that those that lose their job because of the minimum wage should also be factored into the cost/benefit analysis of the minimum wage, their job loss or job lockout should not be considered ‘meaningless’ either. Remember, the minimum wage harms those who are less productive and benefits those who are more productive and since college kids tend to be more productive (more education, better professional skills, better behavioral skills etc), than say, inner city high school dropouts or recent immigrants, the minimum wage will in effect harm the latter at the benefit of the former. Now clearly, a policy that takes from kids in the ghetto, new immigrants, and so forth, and gives to college kids – many of whom live in upper middle class homes – is a policy that on *net total* is bad, right?

    In other words, like Bastiat said, you have to look at both the seen and the unseen when judging any policy, and when you do that, the minimum wage is clearly anti-poor, anti-immigrant, and anti-minority.

  6. True_Liberal says:

    Free Lib (oxymoron noted) poo-poos the current $5.15 as well as the proposed $2.00 phased increase. Evidently his version of liberalism will find some other amount more to its liking.

    So what will it be? A $3 increase? $5? $10? $25? Below what hourly wage will an unskilled worker be prohibited (i.e. deprived of his LIBERTY) in accepting a job?

    And beyond what threshhold of state control advocacy should someone be prohibited from calling himself “Free Lib”?

  7. Observer says:

    Free Lib,

    The supply of labor (prospective employs) and the demand for labor (prospective employers) interact like all other goods and services in the market place; that is, their actions are often guided by the law of supply and demand.

    So think of wage as a price for a service. If the price for a service (or good) increases the consumption of that service (or good) will decrease. So, if the cost to hire employees increases (all other things being equal) the consumption of that service will decrease.

    For example, if it costs .01 to use directory assistance, most people who would rather call an operator to get the number of the local hardware store than use a telephone book. But if the cost is suddenly increased to, say .50 then it becomes more costly to be lazy, and many people will forgo the directory assistance and use a phone book. Likewise, if it becomes more costly to hire an employee a business may decide to not hire a employee (s)he would have otherwise, or lay off, or cut the hours of his or her current employees.

    Also, if the price for a service is increased the incentive to offer that service is also increased. In other words, higher wages increase job competition (more people seeking jobs), If you have more people seeking jobs*, then you would have if there was no minimum wage law, then you have an increase in unemployment Because of the higher wages people who weren’t previously seeking jobs have been enticed by the higher wages to seek employment.

    *Unemployment is defined as: people who are unemployed and who are actively seeking employment.

    Hope that’s clear.

  8. Michael says:

    • In the four years after the last minimum wage increase passed, the economy experienced its strongest growth in over three decades. Nearly 12 million new jobs were added, at a pace of 248,000 per month.

    • In contrast, in the last four years, the minimum wage has held steady, but only 4.7 million jobs have been created.

    Indeed, much-cited studies by two well-regarded labor economists, David Card and Alan Krueger, find that where there have been more or less controlled experiments, for example when New Jersey raised minimum wages but Pennsylvania did not, the effects of the increase on employment have been negligible or even positive.

  9. If what you say is true, then why do European countries – all of which have higher minimum wages than the USA – have a significantly higher unemployment rate?

    The economy surged despite the minimum wage (tax cuts!) not because of it.

    As far as the Card and Krueger study, it flies in the face of the much larger economic community consensus against the minimum wage, for example, here, and is even contradicted by further studies by Card himself, for example, see here. For further economic critique of the Card-Krueger study, go here.

    All in all, I don’t think justification for the minimum wage can be based on one lonely study, especially one that contradicts most of the economic community itself, and one that is shown otherwise throughout the world.

  10. El Profe says:

    Gentlemen, you have betrayed your dickishness. All Free Lib was trying to say was that a poor bastard making 5.15 an hour could use 2.00. I don’t think he was “poo-pooing” a 2 dollar raise, just pointing out that only a stingy-ass miser would deny his workers a paltry 2 dollar raise. For intellectuals and pundits like those in this forum, 2 dollars is practically nothing (think of that caffeine addiction you regularly satisfy), but for a working person (brainless morons to hear you gentlemen describe them) who lives on such a wage, it would really help.
    True Liberal, your slippery slope of wage increases reminds me of those who argue against gay marriage: “Today the gays marry, tomorrow people will be marrying animals”, and all that shit. You don’t think there might be room for a compromise? Say what you want; the poor need to be helped, and, I’m sorry, but to the truly compassionate people in this country, rejecting this truth “appears” like pure assholishness.

  11. Observer says:

    What would truly be hysterical, were it not so pathetically rooted in ignorance, is the idea that the state should decide who is and isn’t a “miser.” Why don’t all the “FreeLibs” and “Professors” deduct form their own earnings to help the poor? Because they’d rather tax others (those who are too busy for nonsensical idealistic vitriolic bullshit.), and claim how everyone is “entitled” to a “living wage.”

    I love to break it to all you ignoramuses (and those of you who know better, but still push for government intrusion) freedom costs. And that cost consists of, in part, the responsibility to take care of and look out for ourselves. If someone is unhappy with the wage he or she is earning, they have the freedom to find another job that is more to their liking. But why look to freedom of choice as the back bone of a “free society” when we have political careers to consider? And let us not forget about those hypocritical individuals who scream “freedom” just before revoking the freedom of those in the job-market to negotiate freely an appropriate wage.

    These leftist are fuckin’ amazing! I imagine they‘ll next try to impose minimum wage laws on the underground (illegal) job-market. What a great day that would be for undocumented workers of America who are from south of the border! How the political left would love to take away one of the bargaining chips these people have going for them with stroke of a pen, if it could earn them a few votes.

    Many of these people want it both ways, they want to revoke the freedom of legal residents to freely negotiate a wage, while at the same time they disingenuously scream “undocumented do the work Americans wont do!” Slap a $20 minimum wage on a few of these jobs and we’ll see just how fast the undocumented get squeezed out.


  12. All Free Lib was trying to say was that a poor bastard making 5.15 an hour could use 2.00.

    Actually, for the vast majority of people on the minimum wage, a $2 raise is not as needed as you may think. Why?

    For one, very few people are on the minimum wage. I think it’s something like less than 3% of the overall population. Secondly, of those that are on the minimum wage, the vast majority of them are high school and college students. Now sure, a typical high school/college student could certainly use a $2 raise, but I wouldn’t classify it as ‘desperately needed’, especially since most of them live at home and don’t have any ‘real’ bills.

    Yet many times, especially to small businesses, that $2 raise could be a matter of life and death. The minimum wage could put so many small businesses out of business that large companies, for example Wal-Mart here, constantly lobby legislators to push for a higher minimum wage. After all, big businesses are able to pay their employees higher wages, and so a higher minimum wage will primarily hurt their small business competition and in effect reduce overall competition, an overall net boom for big business, but an overall worse situation for employees.

    Remember, what keeps wages high is not the minimum wage – after all, only 3% of the population makes the minimum wage. What keeps wages high is competition: if the company you are working for does not give you what your productivity deserves, you have other options – other companies, other job opportunities, other avenues to make a higher wage, and therefore, that company has a strong incentive to pay you what your productivity merits, lest they lose you to other employers. So the minimum wage, in trying to create higher wages for workers, actually has the opposite effect – it reduces the amount of available jobs and puts downward pressure on pay which pushes many workers to either remain poor or get let go. All in all, a worst situation for all workers, but most especially for those who already have a limited amount of bargaining power, those at the very bottom of the economic ladder, the least productive and least educated workers.

    But hey, those upper middle class college students could certainly use the extra $2 an hour, so who cares right?

  13. Michael says:

    Let’s see, raise minimum wage to $7 an hour is bad.

    Allowing CEO’s to sit on each other’s executive compensation committee where they can vote each other huge pay raises totally independent ofthe performance of the stock is good.

    Thats what republicans have been voting for.

  14. Yep, and it boils down to “The free market is much more efficient at allocating resources than the government”.

    Lets hope the Republicans keep voting for that!

  15. True_Liberal says:

    A couple points:

    1) The cost of living is highly variable from place to place around the country. Just how a national uniform minimum wage provides some form of economic fairness somehow eludes logic.

    I fully support the right of a locale, or even a state, to set its own minimum wage, knowing that this has effects pro and con on its own competitiveness.

    2) No one is constrained in any way to stay in a minimum wage job. If you regard your employer stingy, find another one. PS–It’s a good idea to gain education and experience to make yourself more attractive to higher-paying employers.

  16. Michael says:

    Executive pay issues is the opposite of free market, it is collusion. It is a lack of independence. It is a board of directors not providing the oversight they need. It is the stockholders being held subservient to the Chief Executive of the company it owns.

    As Warren Buffet says it is the elite not playing by the same rules that govern the rest of society and rigging the system.

  17. But they are governed, they after all, have shareholders that they are responsible to. The shareholders have a lot to lose if the company makes bad decisions, and as such, there is an added check that helps control inefficiencies.

    Granted, it’s not perfect. But it’s alot better than any arbitrary price control set by the government. A price control set by the government would be too broad, would not take into account changing times and varied circumstances, and as was the case of previous price controls on pay, would simply be circumvented by other means of ‘pay’, without it having to be cash pay.

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