The real minimum wage: $0.00.


Listen To You Tell Me Texas Friday 2/21/14

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In a January 2008 interview with the San Francisco Chronicle, candidate Barack Obama promised that he would make it so expensive to use coal for the purpose of generating electricity that coal-fired electric plants would effectively become a thing of the past. Electricity rates would “necessarily rise,” said Obama.

Also in 2008, Steven Chu, who would go on to become Energy Secretary during President Obama’s first term, said, “Somehow, we have to figure out how to boost the price of gasoline to the levels in Europe.” The goal, of course; encourage the use of other motor fuels by discouraging the use of gasoline.

Early in the current fiscal year, the Obama administration proposed raising the federal excise tax on cigarettes by 94 cents a pack in order to further reduce smoking.

When it comes to things they oppose, Democrats well understand that when you raise the price of something you get less of it.

But then they come to the minimum wage and that understanding vanishes.

In part to shift the discussion away from Obamacare and in part to pander to their base, Democrats are now pushing to again raise the minimum wage – this time from $7.25 per hour to $10.10. As justification, they point to a Congressional Budget Office report saying that when the minimum wage goes to ten dollars, as many as 900,000 will be lifted out of poverty.

But they ignore the part of that same report that says as many as 500,000 will be put out of work. For those who would benefit from an increase in the minimum wage, I’m sure it all sounds like a good idea. But it’s not so good for those whose labor gets priced out of the market. And that cohort is comprised overwhelmingly of the young and the lesser-educated who need a way to enter the workplace to accumulate experience and employable skills.

Labor is no different than gasoline. As the price goes up, demand goes down. Work that was worth $7.25 an hour Monday doesn’t suddenly become worth 39 percent more on Tuesday just because Congress passes a law. Raise the price of labor and employers will decide that work that was getting done at the old price isn’t worth getting done at the new price – and staff their businesses accordingly.

In most cases, it won’t be the highly-skilled, well-paid and long-tenured whose positions get cut. It will be the positions previously held by entry-level workers, low-skill workers and trainees for whom the accumulation of experience is every bit as valuable – many times more so – than cash wages.

The federal minimum wage is arbitrary. But there is a real minimum wage. It’s $0.00. That’s what not having a job pays.

The federal minimum wage has never been about helping workers. It has always been about buying votes – mostly from unions.

The question becomes, ‘Bought with whose money?’ The answer is, ‘Not the employer’s.’

Those votes are being bought with the earnings and opportunities forfeited by those to whom entry into the workforce is blocked by an arbitrary cost for labor imposed upon business by vote-grubbing politicians.

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Paul Gleiser

Paul L. Gleiser is president of ATW Media, LLC, licensee of radio stations KTBB 97.5 FM/AM600, 92.1 The TEAM FM in Tyler-Longview, Texas.

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5 Responses

  1. bearzilla says:

    Journalism is printing what someone else does not want printed. Everything else is public relations. George Orwell

    Paul, you have done it again…..grin…Bearzilla

  2. Linda E. Montrose says:

    Ever wonder WHY the cost of living keeps going up and up? Well, before minimum wage, there was what was called working for your pay. The more you worked, the harder you worked, you were rewarded for. The minimum wage stopped incentives to work more and work harder to get ahead. Why bust your butt when you are going to be garanteed a certain amount of money whether you are a newby or someone already in the work force? This is exactly why we hear, that is not my job when asked to do something outside what they were hired to do to help out in a pinch.
    When a business is required to pay a certain amount regardless of experience, this is coming right out of the business profits. In order to maintain a certain profit level in order to remain in business, one or two things have to be done. Not hire new people and reduce the amount of people you have, or raise prices on what you produce and keep the people you have. What usually happens is the cost increase is added to the product and passed along to the consumer. So where is this helping? Sure they get a raise, but that raise is eaten up by the increase in what you buy, plus many times the raise actually puts the person in a new tax bracket and their taxes are increased as well. So where are we gaining anything here? That sounds like to me about like digging a hole deeper to try and get yourself out. Doesn’t work and more people LOOSE than gain! Just my humble opinion! I have never understood the liberal way of thinking and never will!

  3. DOn Fraser says:

    Very good commentary this morning! I thought that you would have also tied-in the union interest in raising the minumum wage. I have seen several articles on this subject, the most recent being Why Unions Want a Higher Minumum Wage by Richard Berman in the Feb 25, 2013 Wall Street Journal. It seems that several unions have, in their collective bargaining agreements, tied the minumum union wage directly to the federal minumum wage. Explained further, the union worker making the union average $22 per hour is making an amount that is set by the current minimum wage. When that minimum goes up, that union worker (and all others) gets a raise!

    Sounds to me like a great way for those in charge to buy a LOT of votes, all under the guise of “helping out the poor”!

  4. King Barnes says:

    Minimum wage has more to do with taxes than raising the wages of people. If you multiply the difference in wages by 14.4% and then by the number of people receiving the minimum wage. It is a large number. Also, more of these people will pay higher income taxes.

  5. R. Eaglelman says:

    Paul, Your points are excellent and well-taken; however, I must take issue with the value that you assess to not having a job as $0.00. My opinion as to why we find ourselves in such a dependency nation, which encourages unemployment, is the fact that not having a job pays pretty well. There are generations of people in our society who have never been employed, nor do they seek employment with the associated requirements and responsibilities, but rather prefer to sponge off their fellow citizens. When this lifestyle becomes the norm, then there is no longer an incentive for work in the next generation who witness this behavior in their role models. When you can subsist with all the different programs available in our welfare system, why would you want to get up in the morning and go to work, and then have the pleasure of paying taxes? Having a feeling of self-worth and actually contributing to our society in this greatest of countries are qualities no longer admired by a large segment of our population. Raising the minimum wage only creates more unemployment, which transfers more people from makers to takers and more dependency on those “vote-grubbing politicians”, as you so accurately stated.

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