Dear reader, if you did not see last night's State of the Union speech, I will try to spare you most of its banality and hypocritical platitudes. But there was at least one more item I felt I had to touch upon, and that is the demagoguery of our president concerning the minimum wage.
I say "demagoguery", because I doubt that one could attain the highest office in our country and become the de facto leader of the free world* and be so ignorant as to make the statements he made innocently or without knowing better. From the speech:
We know our economy's stronger when we reward an honest day's work with honest wages. But today, a full-time worker making the minimum wage earns $14,500 a year. Even with the tax relief we've put in place, a family with two kids that earns the minimum wage still lives below the poverty line. That's wrong.
Only the minimum wage was not designed to fulfill the needs of a single earner household with children. Minimum wage jobs are typically for those with few or no marketable skills. As the workers gain skill and proficiency, they leave minimum wage jobs behind. And unfortunately, if the minimum wage is set too high, it can keep unskilled labor out of the job market if it is impossible for them to produce what it costs to employ them.
Minimum wage laws effect the bottom rung of the ladder of success. If the price is too high for employers to pay, and remember, the employer is also paying half of the employee's Social Security taxes, and unemployment taxes, too, plus benefits, if any.
The president goes on to say:
Tonight, let's declare that, in the wealthiest nation on Earth, no one who works full time should have to live in poverty -- and raise the federal minimum wage to $9 an hour.
Again, if the minimum wage is designed to accommodate someone with no skills, say, a student still living under his parents' roof, it's not a question of living in poverty, but a temporary measure along the way. The first rung of the ladder. As the student gains skills, some of which are as simple as "showing up on time" and "showing up on time every day", most people are ambitious enough to prepare themselves to continue to climb the ladder.
In the unicorn and rainbow filled world of Barack Obama, what would this produce?
This single step would raise the incomes of millions of working families. It could mean the difference between groceries or the food bank, rent or eviction, scraping by or finally getting ahead.
For businesses across the country, it would mean customers with more money in their pockets. And a whole lot of folks out there would probably need less help from government. In fact, working folks shouldn't have to wait year after year for the minimum wage to go up, while CEO pay has never been higher.
"This single step would raise the incomes of millions of working families." Oh, really? This is a particularly pernicious bit of demagoguery. While it might raise the amount of dollars in a person's paycheck, those dollars become worth less and less. Inflation is whenever you pay more for the same goods and/or services. When the price of gas goes from $2.89 to $3.89, you pay more dollars to fill your gas tank, as if your dollars had suddenly become worth that much less. The same applies to labor. If McDonald's has to pay their employees more, that cost gets passed along to their customers. I notice that McDonald's now advertises their $4.00 Value Menu, which not that long ago was their $3.00 Value Menu.
Not only will those minimum wage workers receive a raise, but others, notably some unions, have their wages tied to the minimum wage: if the minimum wage goes up, union wages go up. Others, who may not be working under a contract are more likely to approach their bosses when minimum wage goes up, arguing that they are worth "X" more than minimum wage, therefore they should receive a wage increase, too.
And when wages go up, pretty much across the board, the cost of those goods and services produced by those people will go up (or in some cases, the size reduced), meaning that for the minimum wage worker, wages will go up, followed immediately by an increase in the cost of living. Or unemployment or underemployment.
One of the unintended consequences of Obamamcare, was that the regulations for mandatory insurance kicked in at 30 hours a week. This resulted in many, many companies reducing the hours of part time employees to less than 30 hours a week. So, a person working 39 hours a week with no insurance can now have his hours reduced to 29 hours a week, still no insurance, and the cost of that insurance has gone up as well. Thank you, Mr. Obama!
"For businesses across the country, it would mean customers with more money in their pockets." But not more disposable income, since everything you need or want to buy costs more money than it did the day before.
Would you like a few dirty little secrets to go on top of that? Aside from being a payoff to the Democrats' friends in the unions whose wages (and union dues, with a direct pipeline to Democrat campaign contributions) go up, the employer's "contribution" to Social Security, that art of their compensation the employee never sees, will go up as well. As inflation forces wages up in more and more industries, some people could experience "bracket creep", where higher wages, but not necessarily more buying power, puts them into a higher tax bracket.
Obama throws in a gratuitous piece of class envy at the end, because however much the CEO is paid, doesn't reflect what the value of goods and services you would be, and thus, the value of your compensation.
Inflation is also a hidden tax on any savings you've been able to put away. If you have a $100 in a checking or savings account, and the cost of buying everything you need to live goes up 5%, that's like a hidden 5% tax on that cash. If you are a government with trillions of dollars of debt, the idea of paying those loans off with cheaper dollars that are not worth as much, is very appealing.
"working folks shouldn't have to wait year after year for the minimum wage to go up"
Most working folk don't. Some may wait for an annual review of their job performance, but they do not rely on government to slap a Band-aid on the problem and tell you that their cosmetic fix will cure your financial problems. Perhaps if Barack Obama would reduce the restrictions and taxes on businesses that keep them from prospering, they could afford to hire more people and pay higher wages to those already working for them. Perhaps if Barack Obama, his EPA and environmentalist wackos were not at war with energy producers, such as oil and coal, the dollars you are earning now would go farther, as the inflationary costs of high energy drive up the prices of nearly everything you buy?
The simple stroke of a pen, and energy producers hire 20,000 people, at well paying jobs, with the promise of more, once the Keystone pipeline is completed. The stroke of a pen and energy producers create more jobs drilling off our coast, mining within our borders creates new wealth, and the taxes generated by them goes to reduce our debt and pay for some of the programs Obama wants to fund and create.
Don't hold your breath waiting for him to tell you that.
*This may have actually fallen to Benjamin Netanyahu, in recent years, whose statesmanship and standing for freedom and the ideals of free and democratic people would seem to eclipse the pedestrian and self serving remarks and positions of our Narcissist-in-Chief.
Cross posted at Proof Positive