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Wednesday, July 12, 2006
Minimum wage is zero
The Atlanta Journal-Constitution
Georgia’s choice not to schedule legislative sessions close to voting is a wise one. The North Carolina Legislature, now in session, has just passed a politically-popular $1-per-hour increase in the minimum wage. The Democratic governor is certain to sign it. In the South, only Florida and Arkansas have mimimun wages above the national $5.15 per hour.
I don’t know why we shouldn’t raise the minimum wage even higher. There’s as much logic to that as there is to raising it to $6.15, as North Carolina just did. It’s just symbolism. The real mimimum wage is zero. If your skills don’t earn your employer $5.15, or another dollar an hour in added value, or $25 if that’s the minimum wage, he has three choices. He can raise prices, unless the market balks. He can stiff suppliers, forcing them to lay off workers. Or he can fire you. To the liberal mind, of course, there’s a fourth option. it’s the fantasy that corporations can take it out of the jillions of dollars in “excess profits.”
In an election year, and certainly close to the time voters go to the polls, raising the minimum wage is popular. Pennsylvania just did it, to $7.15 per hours. And in Ohio, a union-sponsored petition drive is now underway to get 322,899 signatures by Aug. 9 to put an issue on the November ballot to raise the minimum wage to $6.85 an hour. Some 21 states have set higher minimum wages, though surrounding states — Alabama, Tennessee and South Carolina — have no state minimum wage laws.
The current plight of the American automobile industry ought to be instructive. When the cost of labor renders the product or service uncompetitive in the marketplace, jobs disappear. We just saw 30,000 of those vanish from General Motors as it adjusts to market pressures by closing nine North American powertrain, stamping and assembly plants, including one in Atlanta, by 2008.
A higher minimum wage is like mandated health benefits. Governments can pass mandates into law. But they can’t make anybody provide the jobs. Except where politicians build higher wage and benefit costs into public contracts, the free market sets both. If your skills aren’t worth the mandated wage, you’re zero.
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