Thursday, October 16, 2014

Demands and reality

What is the first thing to know about the Wisconsin Jobs Now! and the demand that the Governor unilaterally raise the minimum wage using the "authority" supposedly conferred by Wis. Stat. sec. 104.02.

It seems a just a tad partisan and hypocritical.

I run a 501(c)(3) and I understand that, if your organization believes that left-leaning policy solutions are in the public interest, your activities will tend to lend comfort to Democrats and vice versa. That doesn't make your activities "partisan" in a way that runs afoul of the tax laws or that could conceivably trigger campaign finance regulation.

But sec. 104.02 has been on the books for a long time. Did WJN - or like minded groups (I'm not sure how long WJN has existed) - ever call on Governor Doyle to unilaterally raise the minimum wage? The minimum was raised in the Doyle years (as it was during the Thompson administration) but certainly not to the "family supporting" level that WJN calls for.

Here are a few things to keep in mind.

First, were Governor Walker or any other governor to use sec. 104.02 to unilaterally raise the minimum wage, there would be one serious lawsuit. Since enacting sec. 104.02, the legislature has subsequently fixed a minimum wage. For the Governor to conclude that increase is not "enough,"  would raise separation of powers. Even if that weren't so (or it could somehow be discarded, say, because it could be argued that the legislature really intends the Governor to supersede its enactments), sec. 104.02 does not articulate an intelligible principle on which a "living wage" could be determined. A wage conducive to some one's "welfare" is no guidance at all. If acted upon, sec. 104.02 would be an unconstitutional delegation of legislative power - and, no, the legislature can't decide to do that.

Second, it is unclear that, by its terms, sec. 104.02 could even be invoiced to raise the minimum wage. I don't doubt for a minute that $ 7.25/hr is not a lot of money. It would certainly be tough to support anyone but yourself on that income - and even a single person will struggle if that's all she has to live on.

But sec. 104.02 doesn't say that the requisite wage should be enough to support a family. To the contrary, the statute only says that a worker must be paid a wage conducive to "his or her" welfare. As little as it is, a full time job paying $ 7.25/hr results in an income above the poverty level for a single person. Government benefits will, moreover, significantly supplement those earnings. While it is certainly the case that a low-income worker may have children to support, sec. 104.02, even read for all its worth, does not address that problem.

Third, that brings us to the real problem with all of this. A minimum wage job - or even one that pays slightly above the minimum wage - won't buy a middle class standard of living.  But WJN and similar organizations believe that the only thing that stands in the way of more money for low wage workers is to demand it - to say "yes" to a more than 100% increase in the minimum wage as if it were some law of nature that every one's labor is worth at least to $15/hr to whoever has hired him.

But there isn't. If you prohibit anyone from working for less than $15/hr, there will be certainly be some  workers who benefit. Others will lose their jobs, see their hours reduced or never be hired in the first place. The return to labor saving technology will increase and more workers will be replaced by machine. Prices will go up and business start-ups will go down.

Proponents of minimum wage increases like to think that these adverse impacts will somehow be mitigated by the supposed "multiplier effect" of more spending by low income workers. But since the minimum wage imposes costs - on consumers, the newly unemployed and business owners - a minimum wage increase does not result in more spending. It just shifts it around. Maybe this "shifting around" of spending will result in more economic activity, but that seems unlikely.

Whether an increase in the minimum wage makes everyone - or even poor persons better off (most minimum wage workers are not poor) - is a question that requires recognition of its costs. WJN's campaign - which is nothing more than an assertion of the self evident - ignores them. Demanding the world you want does not make it possible.

Finally, I'll end with a observation for my fellow conservatives. We are right to note that a minimum wage increase might well hurt more people than it helps. We are right to say that distorting labor markets is not way to help poor people. But we ought to acknowledge that, once we recognize that the marginal value to an employer of certain workers will not exceed a relatively low level, we need to also recognize that this is not the same as the value of those workers as people. Some folks are going to need help - preferably on a temporary basis and from voluntary sources - so there must be some sort of safety net. Raising the minimum wage, however, does not appear to be a very good way to provide it.

Cross posted at Purple Wisconsin.


Anonymous said...

give me a break.

just raise the minimum wage and be done with it.

it is the right thing to do.

I am tired of all the analogies.

Anonymous said...

maybe you should get paid less than minimum wage for the articles you write???

Denis Navratil said...

Why is it that some people expect an employer to ensure a certain lifestyle for his employees? Perhaps some push back is in order. If you think about it, an employee tends to take the best offer available to them. As such, an employer is offering a better deal to his employee than the remaining billions of potential employers on earth. I don't think that employers deserve the denigration they get from the progressive types.