EDITORIAL: Republicans stop jobs-killing bill disguised as a wage hike

By: The Gazette editorial
May 1, 2014 Updated: May 1, 2014 at 11:42 am
photo - Democrats want to price entry-level employees out of the market and create the illusion of a pay raise for all.
Democrats want to price entry-level employees out of the market and create the illusion of a pay raise for all. 

Congressional Democrats tried to improve the plight of the working poor Wednesday, but heartless Republicans stopped them. That's the story, after failure of the latest effort to raise the minimum wage.

If politicians can simply pass a law and give Americans higher wages, they shouldn't stop at $10.10 an hour. Raise the minimum considerably higher. Make it $30 an hour if this feel-good legislative schematic really works.

Fact is, it doesn't work. The minimum wage kills jobs and Republicans were benevolent in stopping this political hocus-pocus. Democrats wanted to raise the minimum wage from $7.25 to $10.10 an hour, just after the Department of Commerce reported the economy grew by only 0.1 percent in the first quarter. If the economy can't flourish with today's prices, it can't afford price hikes in the form of wage controls.

The minimum wage proposal was a political ploy to facilitate politicians in telling constituents they care. Though Senate Republicans managed to stop the proposal, Democrats may get the final reward. They can go to voters between now and November with a tale about trying to raise wages, which they'd have done if Republicans hadn't stopped them.

"If your member of Congress doesn't support raising the minimum wage, you got to let them know they are out of step, and if they keep putting politics ahead of working Americans, you'll put them out of office," President Barack Obama said Wednesday.

Senate Majority Leader Harry Reid, D-Nev., accused Republicans of "fighting for the billionaires." He said Democrats, meanwhile, are "fighting for people who are struggling to make a living."

Only discerning voters will see through these platitudes.

A wage is a price on labor. A price works like a valve. When we lower the price on a good, service or commodity, we expand the outlet and increase the velocity at which the product sells. When we raise the price, we constrict the outflow and reduce sales. It's an exact science.

A market of consumers with $1 billion to spend on candy will buy half as many treats the day candy prices double. This assumes, of course, that all consumers don't get a mysterious check in the mail that instantly doubles their candy budgets.

When politicians raise the price of labor, they reduce the number of workers employers can pay - assuming the economy doesn't instantly infuse them with additional cash. A young or disabled person may only have the capacity to produce revenues at a rate of $7 an hour. A law that tells the employer to pay that employee $10.10 an hour is one that forces the employer to terminate the employee. Private sector employers have no means of paying employees more than the value they produce for the company. Nothing in a minimum wage law helps an employer afford it. It's merely an unfunded mandate that imposes negative economic forces on low-wage, entry-level employees. For those who understand it, the minimum wage is cruel.

With the last minimum wage hike, Congress imposed a lingering burden on teenagers. The wage went from $5.15 an hour to $7.25 an hour in 2009 and more than 600,000 teen jobs vanished from an economy that wasn't expanding to absorb the new cost. Not all teenagers, in all regional economies, can produce $7.25 in revenue each hour. The wage hike took hundreds of thousands of them from $5.15 an hour to $0.00 an hour.

Most of us are eager to believe that legislative fiat can solve big problems. What a wonderful world this would be. We could outlaw poverty, cancer and tornadoes. Everyone could have a luxury home with three cars in the garage.

Our economy isn't a mechanism Congress can control. It is the manifestation of billions of consumer decisions made freely 24 hours a day. It is a complex, sociological organism that treats crude political meddling as an infection. It interprets artificially overpriced employees as a threat to the system and purges them.

Politicians who killed the latest wage hike appear uncaring and mean. In truth, they helped struggling Americans who desire to earn and are barely able to find work.

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