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Screwing the Poor in One Easy Step
More hurtful help from government…
[Tom McClintock] 4/27/06

The most important thing for any poor person trying to improve his or her condition is, of course, a job. It is the entry-level job that accords impoverished workers – even those with no skills, no references and no employment record -- the invaluable opportunity to succeed and to prosper. It is literally the first rung up the ladder of success.

If that is true, then the most vicious conceivable governmental policy would be one that eliminates entry-level jobs, making it harder and harder for the poor to get a foothold in life.

Yet that is precisely what the state of California is preparing to do. Legislation is now moving that would in effect declare that anyone whose labor is worth less than $7.75 per hour will automatically be denied entry-level employment.

The proposal is couched in the soothing and smarmy rhetoric of leftist populism. It is described as a modest proposal to raise the minimum wage by a dollar over the next two years, increasing annual wages of minimum wage-earners to a paltry $16,000. “It will help the lowest-paid workers in California to improve their purchasing power and reduce their needs for public assistance,” according to one proponent.

Tom McClintock

Mr. McClintock is an expert on matters of the State budget and fiscal discipline. He is a Senator in the California State Legislature and ran for Governor in the 2003 recall election. His valuable website is found at [McClintock index]

But if that’s all it takes, why stop there? If a simple legislative act increasing the minimum wage to $7.75 is all that is needed to improve the lot of the working poor by just a little, then why not raise it to $10 per hour, and get them to the poverty level? For that matter, why not raise it to $50 per hour, assuring every working Californian a comfortable living?

The cold truth is that if your labor is worth $6.75 per hour and the minimum wage is raised to $7.75, you simply become unemployable. The first rung of the ladder is gone and there’s no place to start. Proponents of this policy apparently believe that it is better NOT to have a job paying $7.75 per hour than to HAVE one that pays $6.75.

The French minimum wage is twice that of the United States and the result has not been greater prosperity. Quite the contrary, France’s unemployment rate is twice the American rate, and it hovers at an intractable 40 percent within those communities that recently rioted for days.

One newspaper gushed that the proposed increase will boost the pay of California’s “working poor” by $2 billion. But the vast majority of minimum-wage earners aren’t working poor at all -- the median household income of a minimum wage earner is $40,000. Most are teenagers chasing their first job or spouses of bread-winners trying to make a niche for themselves in the job market.

Ironically, as the minimum wage rises, these wage earners are much better able to survive the competition for remaining jobs than are inner-city teenagers, recent immigrants and welfare moms who need those jobs the most.

True, of the five percent of California families who depend on the minimum wage for more than half of their income, it’s not easy. But new employees don’t earn the minimum wage very long. As they build their job skills and prove their reliability, their pay grows proportionally. Sixty three percent of minimum wage earners receive raises in their first year of employment. But by pricing unskilled labor out of entry level jobs, those raises won’t be realized because those jobs either won’t be there or will be snapped up by more skilled workers.

The other big losers are the vast majority of the working poor who landed an entry level job at the minimum wage a few years ago, but who have now worked their way up to subsistence wages above the minimum. These workers will get no benefit from the minimum wage hike, but as prices rise in response to the employment constraints of the new law, their families’ standard of living will decline.

It is the ultimate expression of the cruelest of all human lies: “I’m from the government and I’m here to help.” CRO

This piece first appeared in the LA Times




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