What happens when the U.S. Secretary of Labor visits a church in Charlotte? If an incident earlier this month is any indication, faulty political promises and destructive economic policies continue to spread.
It took place on April 3rd. Acting U.S. Labor Secretary Seth Harris made an appearance at a Baptist Church in North Carolina’s largest city, along with Charlotte Mayor Anthony Foxx. He was visiting to promote President Obama’s proposal of elevating the federal minimum wage requirement from the current $7.25 to $9.00 an hour.
Harris and Foxx gathered in a large room within a Baptist church building. They sat in a large circle with several “average” (which means “hand-picked, pre-screened, and pre-approved by the Labor Department”) Americans living in Charlotte who work at jobs that pay only minimum wage. As news microphones and cameras caught all the action, Harris facilitated a “discussion” with the minimum wage earning Charlottean’s, and explained how their lives would benefit from the President’s new proposed mandate.
Harris told the group participants that if the minimum wage requirement was raised to $9 an hour, a full-time worker at the current minimum wage would earn an extra $3,500 more per year. A total of 557,000 workers in North Carolina “would directly benefit from that proposal,” he said, noting that President Obama is seeking to “lift people out of poverty” by imposing this new proposed requirement.
It all sounded so good. But in reality, there were problems.
For one, mere laws don’t “lift people out of poverty” – genuine wealth creation does. Using the force of government to mandate that a business owner pays a worker a specific wage does not ensure that wealth is being created. On the contrary, such laws are coercive mechanisms of wealth redistribution, and they only ensure that an increasing amount of existing wealth is taken away from one individual or group and transferred to another.
History, even recent history over the course of our lifetimes, demonstrates this. While roughly half of the world’s population -about 3 billion people - live in measurable poverty today, the other roughly 3 billion are measurably “middle class,” and mostly facing upward mobility.
So what has happened to the more fortunate 3 billion? We have not been “minimum waged” to wealth. We’ve been fortunate to live in countries where we’ve been relatively free to privately own property and advance in the marketplace and amass wealth for ourselves.
The best examples of this have been post-World War II Japan, Singapore and Hong Kong, along with the increasingly liberated economies of China and India. Many Americans seem oblivious to this capitalistic, free market transformation that has taken place over the last few decades – surely if we were aware of this we wouldn’t have elected our current crop of politicians who are taking us in the exact opposite direction – but the transformation is nonetheless real.
Another problem with Harris’ promises is that they are based on the false assumptions that government bureaucrats understand the inner-workings of a business than a business owner does, and that government mandates always produce their desired outcomes. Can every small business in Charlotte – or anywhere else in the U.S. – afford to “absorb” the increased labor costs that will ensure with a higher minimum wage mandate? Harris is frequently asked about the un-intended consequences of his policy proposals, and will frequently say “I reject the notion that this kills jobs.”
Did you hear that business owners? He “rejects” it, so it is obviously not a concern. In fact, Harris promised the minimum wage earning Charlotteans that raising the minimum wage requirement will actually improve wages overall, and stimulate job creation.
Harris, by the way, took no time at all in Charlotte to meet with the business owners that would be impacted by the proposed wage mandate. When you have degrees from elite schools, and your work experience is based exclusively in the worlds of academia and law, and you wield the power of government (these characteristics describe both Harris and Barack Obama), it’s easy, apparently, to believe in the infallibility of your ideas. There’s no sense wasting time on the “non-believers.”
For now, Americans have put their collective trust in politicians who have promised to re-distribute us all to a better, “more fair” existence. Let us hope and pray that we see the error of our ways – before the country is irreparably damaged.
The late Senator Daniel Patrick Moynihan famously observed that “Everyone is entitled to his own opinion, but not his own facts.”
It’s an admonition not taken particularly seriously by today’s political left. They embrace, extol, advocate ideas and policies based on what they wish were true, regardless of how often and consistently their ideas have been proven wrong.
Take, for instance, the minimum wage.
Rep. Jesse Jackson, Jr. (D-Ill) wants to again raise the minimum wage – from $7.25 to $10.00 - despite an abundance of experience that doing so accomplishes exactly the opposite of what minimum wage advocates claim is their objective. Make low income earners better off.
Why doesn’t McDonalds increase the price of Big Macs if they want to sell more? It’s pretty obvious that consumers will buy less of a product when its price goes up.
So why is it not equally obvious that consumers of labor – employers – will buy less of a class of labor if the price of that labor increases?
The data bears out this very simple logic. We have a long history showing correlation between increases in the minimum wage and corresponding increases in unemployment in those sectors that earn in this range – the young and unskilled.
University of Michigan economist Mark Perry has calculated that over the period of the last minimum wage increase – increasing it from $5.15 in 2007 to $7.25 in 2009 – teen unemployment increased 5 percentage points more than the general increase in unemployment over that period.
Nevertheless, Rep. Jackson feels entitled to his own facts. At his press conference announcing his bill to raise the minimum wage, he said, “Now it’s time to bail out working people who work hard every day and they still only make $7.25. The only way to do that is to raise the minimum wage.”
Ron Haskins, Co-Director of the Center on Children and Families at the Brookings Institution, recently testified before the Senate Finance Committee on hearings on poverty.
Among the factors that he identified as the causes of poverty is declining participation in the work force. According to Haskins, between 1980 and 2009, work force participation among males declined from 74.2 percent to 67.6 percent.
However, among young black men, work rates declined from 60.9 percent in 1980 to 46.9 percent in 2009.
How exactly does Rep. Jackson think he is helping the prospects for these young black men by making it more expensive to hire them?
Haskins’ testimony presents an abundance of facts about our experience with poverty and with government-centered approaches to dealing with it. Experience generally characterized, for those that choose to consider facts, by more and more government spending getting less and less.
According to Haskins, federal government spending, per person in poverty, has tripled, since 1980. The total being spent by all levels of government – federal, state, and local – per person in poverty is now about $23,700 per person.
Despite dramatic expansion of government spending on poverty programs over the years, there has been little change in the overall rate of poverty.
What’s key in alleviating poverty?
Individual initiative and personal responsibility. According to Haskins, following three rules reduces to 2 percent the chances that an individual will wind up in poverty and increases to 72 percent their chances of winding up a middle class wage earner.
“Complete at least a high school education, work full time, and wait until 21 and get married before having a baby.”
According to Haskins’ research, those violating these three rules have a 77 percent chance of winding up in poverty.
What can government do so that our economy will grow more rapidly and generate more jobs?
Appreciate that government cannot create jobs or wealth. Only private individuals can do this. Government should do its proper job and protect lives and property of citizens and minimize getting in their way so they may work, produce, and invest.
What happens when the U.S. Secretary of Labor visits a church in Charlotte? If an incident earlier this month is any indication, faulty political promises and destructive economic policies continue to spread.
