The nearest way to glory -- a shortcut, as it were -- is to strive to be what you wish to be thought to be.
Socrates
The Minimum Wage: Counterproductive Public Policy
The argument follows a general pattern that liberals/progressives usually follow, i.e., "I'm willing to do it; therefore, everybody else will do it." This was Warren Buffett's general endorsement of class warfare tax cuts--he wasn't going to act on his own (Buffett can cut a voluntary check to the IRS anytime he wants), but what he's trying to do is play the part of the "good" millionaire: he's not being greedy--it's the rest of the millionaires whom aren't willing to do the right thing. I have a real problem with that because government is a monopoly. There is no effective competition to make government managers engage in cost-effective operations, to limit its programs and operations to the essentials. We have a standing bureaucracy as well as a standing military, which, by definition, will use up all the assets they are allocated.
Remember what Madison said? "I believe there are more instances of the abridgement of the freedom of the people by gradual and silent encroachments of those in power..."; "If Congress can do whatever in their discretion can be done by money, and will promote the general welfare, the Government is no longer a limited one possessing enumerated powers, but an indefinite one subject to particular exceptions"; "The government of the United States is a definite government, confined to specified objects... Charity is no part of the legislative duty of the government."
Hear that sound? It's the sound of Madison turning over in his grave at what Obama and his progressive allies are doing: any breach in the wall is hardly "balance", but a beach head of an entitled government bureaucracy which is not dedicated to the people but to its own preservation. Obama will spend all the money, and all of the future's money.
My accountant professor friend is a liberal Democrat Catholic; back when we were both UH graduate students, we once had a conversation which began much like the discussion above. It struck me as odd at the time (I was a conservative Democrat during that period), but he said something to the effect that he was willing to pay more for a fast food meal, provided that it all went to the benefit of improving the pay of employees. Any faithful reader knows what my initial response to that is: MONEY IS FUNGIBLE. Whatever the restaurant owner's costs of a fast food meal--food, energy, taxes, wages, insurance and other overhead--are all transactions reflecting component demand and supply. If wages are insufficient within the context of a marketplace, employers will not attract labor. Employers can attract applicants by raising wages. This is exactly what is happening in North Dakota, at the beginning of an emerging energy boom. There are more jobs than available workers (because of limited capacity of surrounding area homes and apartments, etc.), and even low-skill jobs (like fast food) are going for far above the minimum wage.
A minimum wage sounds like a noble, charitable concept--but businesses are not running charities. If you raise prices, you lose some customers, e.g., people decide to brown bag their lunch a couple of days a week. Of course, we know that in a considerable proportion of places, minimum wages are earned by people whom are not the head of household (e.g., teenagers living at home).
But the point is, a sizable proportion of the unemployed are those with general than specific skills (say, medical doctors, accountants, engineers, etc.) My first minimum wage job was washing dishes at OLL; I also mopped floors at 6 AM. (I later worked at various libraries--the social work school library and then the general library.) I was so eager to grab whatever hours I could get, that I once accepted a chance to work Sunday hours without realizing it was Super Bowl Sunday--and I would not get the chance to see my beloved Minnesota Vikings lose another Super Bowl. (The librarian refused to release me.) What if the school had offered me to work extra hours, but for 25 cents less than the minimum wage? To a guy who used to make a buck a day throwing 90 newspapers daily pedaling a bicycle for a few miles under a boiling South Texas sun while in high school, it was money I needed to pay for things my scholarship didn't cover, including room, board, books, and incidental expenses. The fact is, the university had a budget. I didn't want or need the government getting between the college and me. Sure, who wouldn't want to make as much as he or she can get? Maybe the college had a project it wanted to do but it could only afford so many student-hours given its budget.
Maybe I was willing to enter into a flat bid arrangement for the project. If I could find more productive ways of doing the job, I would effectively by raising my own pay rate. Or I could lock in a guaranteed bundle of hours, for which I would be willing to pay a premium (e.g., accept a discount). The point is, I didn't necessarily want the government (or a union) coming between the employer and myself. I considered the right to transact a fundamental liberty.
LIberals will say it's a race to the bottom. That's absurd. You see, liberals/progressives fundamentally don't believe in the law of supply and demand; they raise the minimum wage for workers, and what happens is they shrink the number of man-hours of labor. Companies don't sit back and think, "This year we're going to give the workers more money, because, gosh darn, we're good people and it's the right thing to do." Prices affect customer demand, and we have other costs that factor into that price. If we don't cover our expenses, we'll be out of business (unlike the federal government.) Let the labor market find its own equilibrium; artificial wage floors distort the market; businesses will look to hire part-time workers than full-time; they'll look to staff during the lunch break instead of mid-morning or mid-afternoon.
Are these wages "fair"? In what sense is any price "fair"? It's a business transaction, not a charity transaction. I remember talking to some Indian friends about relative compensation. At one recent project, this female project manager and her fiance were renting a 2-bedroom apartment in DC for $1800/month (and were glad to find it). If I want to any place in Texas (outside a metropolitan area), I could probably get 3 months of rent for the same type apartment at that price.
But let's get away from the progressive/liberal delusional thinking that they are helping the low-skilled person find work by shrinking the number of man-hours at a given wage level. It's like squeezing a balloon. If you're a lucky low-skilled worker being paid above the equilibrium ("real") wage for the market, you've won the wage lottery. But as the supply of jobs shrinks in a tough economy (due to lower demand and other factors) and the number of low-skilled unemployed increases, it's all or nothing. What they want is man-hours, and you get more man-hours if you reduce the cost of labor. Wage floors distort the labor market.
San Francisco recently made news by becoming the first city in the nation to dictate a $10.24/hour minimum wage. At the beginning of the year, 8 states, including the highest, Washington state at $9.04/hour. An Edmonds website post points out the predictable results of the consequences of this hike in Washington.
Obama Proposes a 0.5% Increase in Federal Pay: Thumbs DOWN!
I won't write a long commentary here. First, keep in mind: PAY IS NOT COMPENSATION. Notice that federal benefits amount to roughly 40% of compensation, far above the average percentage in the private sector. We need to do something dramatic about making these programs more sustainable in the long term, and this includes military pension systems where, say, relatively well-compensated career officers can get half-pay for life by their early-40's (meaning probably up to 30 to 40 years). If Governor Walker (R-WI) can talk courageously about long-term sustainability of state/local compensation, there should be no hypocrisy in Republican leadership on Capitol Hill in applying the same sustainability criteria on federal and military employees.
And don't give me this politically untouchable "thank-you-for-your-service" crap when you're talking about the entitled government class. [For those whom really did serve on the front line or engage in live-threatening service, I do express my sincere thanks, however misguided our national leadership was for unwisely putting them in harm's way.]
How many people really think the following is right? (Talk about sucking from the government teat! What moral hazardous nonsense has resulted from BOTH Dems and Reps lawmakers pandering to military personnel?)
A few weeks ago I was reading an article in Money magazine about a couple who retired at 40. While they do live frugally in relatively low-cost St. Louis, the primary reason they were able to retire is that they each served for 20 years in the military and now receive a pension of $58,500 per year. They will receive this amount, adjusted for inflation, for the rest of their lives! On top of that, they get health coverage forever as well.I'm sure that some readers might accuse me of engaging in the Politics of Envy, but that's not the case. It's the fact that instead of doing what many military veterans, including my dad, had to do when they finished 20 years of service--start a second career as gainfully employed, contributing members of society, these people think that the American people should pay them more than the average household earns for the rest of their lives.
So before we cry tears for the pay of federal employees whom are nearly impossible to fire or lay off, let us also note that the current (some, including myself, would regard as excessive for many professions) pay "freeze" does not apply to step increases and promotions.
Of course, if you read the article, you'll find a lot of public sector unions less than enthusiastic about a 0.5% increase--but they prefer it to no increase from GOP lawmakers. At the same time, they're worried that the Congress or White House will upset the "balance" of increases between federal and military personnel, and they don't like the fact that social security recipients will get a bigger cost-of-living increase than they'll get. In the meanwhile, over 14 million people, without multi-year enlistments or civil service job protections, are unemployed or underemployed and can't retire before their 60's with a stipend for life.
Think that federal or military personnel earning over $100K per year in compensation (salary and benefits) should have to face pay cuts, benefit reforms, or layoffs just like those in the private sector? So do I.
Musical Interlude: My Favorite Groups
Styx, "Come Sail Away"
