I haven't waded particularly far into the second Obama administration, or its agenda thus far, but I did find it interesting President Obama mentioned increasing the minimum wage in the State of the Union speech. I did not find it overly surprising, because at what point shouldn't we stop gasping at this attempts at political theater from both sides of the aisle?
I have no doubt there will be a minimum wage increase eventually. I do not believe it is going to be the buck seventy-five the president wants, but probably eight bucks at least. That is, unless Obama gets tired of the perpetual logjam and just does it himself, somehow, like MacGyver escaping from an elevator by using a hockey ticket and a single human hair.
What really caught my eye was a guest editorial by a guy named Sid Mohn in last Friday's Springfield (Illinois) State Journal-Register. When you start off with the headline Raising the minimum wage isn't bad for business, you know you are in for something good.
Mohn begins by mentioning the same call for a minimum wage increase by Illinois Governor Pat Quinn in his recent State of the State speech, and then asserting than the data backs up a likely increase in jobs and money brought into the state's economy. Mohn also opines this would reduce taxpayer costs by moving workers out of poverty.
Facepalm. This sounds vaguely Democratic here. In Mohn's bio, he is listed as co-chairman of the Illinois Commission on the Elimination of Poverty. Well, there you go. Only a Democrat would think the solution to poverty is to throw money at it. I mean, the $13 trillion <--that says trillion, we have thrown at poverty has led to a continued and increased loss in the War on Poverty has not seemed to do much good, so raising the minimum wage, that will help? Capitalizing Poverty and goin' declarin' War (not just war, but War) has done as about as good as declaring War on Drugs, etc. If Poverty doesn't get its act together, President Obama might just declare WAR on it, and once you go full caps, there's no turning back.
After having already successfully lost me this far into his op/ed, Mohn continues his roll, saying that increasing minimum wage would "increase household spending, increase the demand for goods and help businesses grow," and that the Economic Policy Institute figures if the state's minimum wage was pushed to $10.65, it would infuse $2.5 billion into Illinois' economy.
What the hell did this guy study in college, because it sure wasn't economics, and I guessing he didn't spend a lot of time in logic class, either. I just took basic economics, and even I can tell this guy is a whole bunch of different Kool-Aids all at once. Suddenly increasing payroll costs for small businesses, especially those already caught in the crosshairs of Obamacare, will not, is not going to, and can not possibly increase job growth in a state already struggling with 8.7% unemployment. Also, keep in mind that Illinois recently increased the state income tax from 3% to 5%, which amounts to a 67% increase in the income tax rate. Who is really going to benefit from a higher minimum wage, except for the people pushing for it (none of whom are even on a first-name basis with a minimum wage)?
To help back his case, Mohn uses historical data from the Indiana Business Research Center from 2005, which shows job growth from private employers were not hit by a minimum wage increase, and Illinois achieved the second biggest rise in job growth in the Midwest. Fantastic. Glad the numbers were that good, eight years ago, during a different economy.
What this comes down to is when a minimum wage increase goes in, most small businesses will keep as many employees (presumably part-time) as they can under the new minimum, then the rest will cut loose- into that state with the 8.7% unemployment rate, leaving the rest to pick up the slack and still get the same amount of business done. Or, the employer will simply reduce their operating hours. Any way you slice it, the workers in Illinois are not going to be done any favors with this.
Granted, wages have not kept the pace with prices, and apparently the Obama administration is hoping that no will will notice they are ignoring the laws of supply and demand with the labor force, but there is a world of work that is going to have to be done first to minimize the damage from all this help you are trying to give the middle class.
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