"New" Energy Reform: Same Old Politics

On July 24 of this year, the federally mandated minimum wage will rise from its current level of $6.55 per hour to $7.25 per hour. Oh, you don't remember Obama signing this bill? He didn't, Bush did. This bill was passed by Congress in 2007. It was part of the Democrats "Six in '06" campaign strategy that brought them a slight majority in the House and a 50/50 tie in the Senate. Actually, it wasn't a bill on its own. It was attached to an Iraq war spending bill so Republicans would support it and Bush would sign it. Of course in 2007, the economy was rocking along and unemployment was very low, so raising the minimum wage seemed like a splendid idea. Under this plan the minimum wage rose in three installments. The first in July of 2007, then in July of 2008 and the last will be on July 24.

In an effort to be totally honest, let me say that I don't believe the federal government should be mandating what any employer pays any employee. That decision should be solely between the employer and the employee. I'm a bit more lenient about a state mandating a minimum wage. I still disagree philosophically, but that is tempered by my firm support of state sovereignty.

Changes to the minimum wage rate affect the unemployment rate. According to Diana Furchtgott-Roth a senior fellow at the Hudson Institute and former chief economist of the U.S. Department of Labor, an increase in the minimum wage means that the employer must find workers that are able to produce goods or services at a value proportional to the new wage. This increases the skills needed to obtain these jobs and therefore means less people are qualified for them. What is this going to do to the already nearly double-digit unemployment rate?

But that may be the point, at least partially. Force entry level wages (and benefits) so high that employers can't afford to hire unproven, entry level workers. This will force many of these workers to be dependent on the federal government for their subsistence, thereby providing a loyal block of Democrat voters. All the while Democrats will be blaming the employers for not hiring them.

One of the Democrats biggest selling points in raising the minimum wage was that these workers need to earn a "living wage." Well, I hate to be the heel in this wrestling match, but someone has to tell the truth. If you are an adult and your work skills are such that you are only qualified for a minimum wage job, you should be ashamed of yourself. By the time you are an adult and you are your sole means of support (let alone supporting a family), you should have gained education, training, and experience and/or work skills commensurate with employment that pays well above minimum wage. It's called personal responsibility, and you can't have personal liberty without it.

Raising the minimum wage hurts teenagers the most. Minimum wage jobs are meant for entry level workers. According to the Bureau of Labor Statistics, over half of minimum wage earners are between 16 and 24 years of age and almost 70% work part time. The family income of these workers is over $50,000 per year. So these are teenagers or young adults living at home working generally while going to school full time and gaining valuable general employment skills and experience that will pay dividends in the future. Raising the minimum wage means there will be less opportunity to work for these young people.

Back in 2007 no one anticipated the recession of late 2008 and 2009 (and who knows how much longer). The Democrats used the minimum wage as a way to paint themselves as compassionate and caring for the little guy and Republicans as heartless, moneygrubbers and it worked. But in a recession, when employers must cut back, the first to go are generally the lowest on the totem pole, the minimum wage worker and anything raises the cost to employ this worker exacerbates the problem. But that's all water under the bridge now. So, it looks like all this compassion for the little guy is going to cost him his job.