Maximum damage, minimum wage

First Posted: 3/11/2014

Since calling for an increase in the minimum wage during his State of the Union address, President Obama has seemingly been on a singular mission to make it so.

Jumping upon any issue that will take the focus away from his personal albatross, Obamacare, and his inept foreign policy efforts in Ukraine and everywhere else we see the hand of Russia’s Putin, the president and his minions have not relented in this near daily obsession.

Citing polls that show broad support for his position, the president has called on citizens to pressure Congress to raise the minimum wage to $10.10 an hour. As a “man of the people,” Obama has also highlighted his executive order requiring federal contractors to pay this same amount in hourly wages and has taken every opportunity to blame Republicans for being out-of-touch with mainstream America. Yet, is this simply more economic bumbling on the part of an administration so inept that it makes up solutions which only worsen our plight?

A recent Congressional Budget Office report said that while 900,000 Americans would benefit from a hike in the minimum wage, 500,000 jobs would be lost. No surprise, as basic economics teaches us that higher wages for workers means increased costs, translating to fewer workers and/or higher prices for consumers.

So while some may prosper, many more would likely be added to an already excessive number of under-employed or unemployed. As economist Steven Moore says, the real minimum wage will be “zero” for those who lose their jobs as a result of any minimum wage increase. With a domestic economy still lacking any serious recovery momentum, we need more unemployment like we need a hole in the head, especially when stagnant wages are the result of already-excessive joblessness!

The Economic Policy Institute also reports that inflation adjusted earnings for low wage workers have consistently fallen since 2009, while overall unemployment increased. During this time, the national hourly wage fell by 6.4 percent in 47 states, with only West Virginia, Mississippi and North Dakota breaking the trend. This is due to employers benefitting from a surplus of lower paid workers, among them, millions of illegal aliens. If this trend continues, how many more combined wage and job losses will result, especially if a mass amnesty program for illegals is enacted, plus a minimum wage increase?

Author Ann Coulter adds that since the late 1960s, nearly one million low-skilled legal immigrants have arrived in the United States every year, also reducing income for low wage workers. According to Harvard economist George Borjas, U.S. immigration policies have lowered American income by $402 billion a year. Thank you Washington D.C.! How much additionally has the federal government paid out to support jobless workers and their family members impacted by a real minimum wage which has fallen by almost one-third since 1968? But fear not employees; you are not alone.

Employers are also under assault by not only the “wage police,” but ever-changing economic trends, burdensome and unnecessary regulations, and the always-present and far-reaching impact of Obama care.

Florida-based Gator’s Dockside restaurant chain recently announced that a 1 percent surcharge will be added on all orders to help offset the Obamacare insurance mandate that takes effect in 2015.

At present, the restaurant only insures management employees, but in December, 250 part-time employees will receive health insurance. Gator’s says that extending this coverage will cost approximately $500,000 per year. The surcharge will only offset this cost by $160,000. Will Gator’s again raise its prices to make up the difference? Will it eventually eliminate part-time employees to save additional costs? One thing is for sure, Gator’s will not be the last establishment to implement a surcharge to maintain its competitive edge during a time of immense challenge. At least one Los Angeles restaurant is doing the same.

As the Obama administration continues to target private business as part of its class warfare strategy, whether it be through mandated wages or Obama care, employers will be forced to develop new approaches toward financial survival while maintaining a talented employee base. Meanwhile, employees will need to develop multiple skills which ensure their value to employers. This is how it works in the real world.

Raising the minimum wage and punishing employers might be nice political theater, making some feel warm all over, but do nothing to generate real job growth or better incomes. Economic facts remain the same despite what those in Washington may claim. As the saying goes: If ands and buts were candy and nuts, every day would be Christmas.

Post navigation