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Saturday, Oct. 25, 2014

Greg Bell: New minimum-wage laws — Government as provider

By Greg Bell, For the Deseret News

Published: Fri, Aug. 15 6:29 a.m. MDT

 Its one thing to conclude that the government owes people a living. Its quite another for the laws to mandate employers to pay workers what the government has generously decided they ought to have.

Its one thing to conclude that the government owes people a living. Its quite another for the laws to mandate employers to pay workers what the government has generously decided they ought to have.

(Elaine Thompson, Associated Press)

Fast-food workers are staging protests for a minimum wage of $15. An Associated Press article quoted a woman who was forced to move herself and her two daughters into an apartment with two other adults when her hours at McDonald’s were cut from 40 a week to about 24.

“‘I don’t think $15 will make me rich. ... I just want an apartment for my family and be able to have my kids in their own room, to not have to wait for the washing machine or the bathtub, and I don’t want to be behind on bills if I take time off or get sick,’ said the woman, who earns minimum wage after 12 years with the company.”

It’s a compelling story. I sympathize with her desire for financial independence. But does our government — i.e., do we the people — owe her a job at a wage that will make her financially independent?

Historically, Americans were responsible for their own welfare. Each person chose his own educational path, line of work, how to handle credit, discipline in paying bills and whether to marry and have children. If one lived irresponsibly there were consequences.

That all changed with the 1960s' Great Society welfare programs, which have grown into TANF, WIC, food stamps, Medicaid, subsidized day care and subsidized housing. Today, the fourth and fifth generations of some families continue the poverty cycle. Long-term welfare recipients are often deprived of meaningful incentives to become self-reliant and to feel the sense of human dignity, which independence inevitably brings.

Congress might have set eligibility conditions for these programs, such as learning English, working or looking or training for work, being tested for drug use, learning a trade or otherwise getting an education. But not our federal government.

Knowing that being a single teenage mother is the biggest predictor and determinant of long-term poverty, we might counsel more young women about the serious consequences of premarital sex and how they could avoid poverty for themselves and their children through adoption. But not our federal government.

Fortunately, Utah and other states have toughened eligibility standards for many such programs when allowed by federal rules.

Our federal government has opted for a “no-fault” welfare system — the big exception being the hard-won and innovative 1990s “workfare” program, which the Obama administration has essentially “waived.” Blind to how people respond to incentives, congressional and administration liberals don’t want bad personal choices to affect benefits. Thus, it's no surprise that the fast-food worker in Chicago expects government to guarantee her an apartment. Our Great Society government has taken on tens of millions of long-term wards. Why wouldn’t that same generous government ensure her a wage of $15 per hour?

However, even exceeding the perversity of welfare-state philosophy, there’s a pernicious doctrine at work in our current minimum-wage discussion. You and I fund Great Society welfare programs with our tax dollars. The workers pay for the nonworkers. Classic redistribution of wealth.

But hiking the minimum wage from $7.25 to $15 would move us into the realm of confiscatory government. Why go to the bother and political unpleasantness of raising taxes to fund welfare programs when lawmakers can make employers double the minimum wage by fiat? Without increasing taxes, government cleverly shifts the burden to private business to pay workers wages sufficient to have their own apartments.

Of course, advocates for higher minimum wage know fast-food restaurants, hotels, contractors and grocery stores must pass on the cost of the new minimum wage by charging a lot more for hamburgers and hotel rooms. But the bad guy will be McDonald’s, not the IRS. It’s one thing to conclude that the government owes people a living. It’s quite another for the laws to mandate employers to pay workers what the government has generously decided they ought to have.

Greg Bell is the former lieutenant governor of Utah and the current president and CEO of the Utah Hospital Association.

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1. Roland Kayser
Cottonwood Heights, UT,
Aug. 15, 2014

Virtually every "fact" presented in this piece is wrong. If you want to make an argument against raising the minimum wage use real facts, not made up ones.

2. marxist
Salt Lake City, UT,
Aug. 15, 2014

"Without increasing taxes [by raising the minimum wage], government cleverly shifts the burden to private business to pay workers wages sufficient to have their own apartments." Yes, and in the process government "cleverly" shifts the burden of paying employees what they are worth from government (society as a whole) to where in belongs - the employers.

You have to admit Greg, government can be pretty "clever."

Greg suffers from the supply and demand model of wage determination, without understanding the many assumptions which economists make when they presume to use it. The most important assumption is that employers do not have "market power," i.e. the ability to force a wage - they do.

The late economist Joan Robinson who visited us back in '81 said economics should begin with an assumption of many little monopolies instead of "perfect" competition. She embodied her ideas in her seminal work "The Economics of Imperfect Competition." I don't expect you to read this, Greg, but you get the general idea.

3. Mark l
SALT LAKE CITY, UT,
Aug. 15, 2014

There's no such thing as a free lunch! Someone always has to pay, when the bill comes due. The price of labor is one of the costs of doing business, When costs go up, the business must recover all of its costs, or it will go out of business. This is basic economics, and not that difficult to understand.

4. anti-liar
Salt Lake City, UT,
Aug. 15, 2014

Actually, the real "pernicious doctrine" prevailing in today's minimum-wage discussion is that businessmen somewhow are entitled to a worker's labor and to the prime hours of that worker's short lifetime. The Spirit of Slavery is very much alive in this country and in Utah. How typical that an editorial of this type would have NOTHING to say about an employer's moral responsibility to voluntarily pay his worker what he justly has earned and deserves.

And no way is a full-time worker being paid a fair wage who is not able to afford a lousy one-bedroom apartment. It absolutlely is wrong and it is not the way things used to be.

Also the notion that higher wages necessarily means higher retail prices is standard, fearmongering propaganda for a greed-based, myopically profit-focused business model. In-N-Out Burger's non-greed-based business model, in contrast -- i.e., higher pay, more expensive ingredients, yet LOWER menu price -- proves the propaganda to be false.

The real problem is the moral disease of Greed which has an iron grip on the hearts of a large number of America's businessmen today.

5. techpubs
Sioux City, IA,
Aug. 15, 2014

There is truth in this article. However, there is more to the current situation than what is stated. One of the causes of the inability to not only survive but also to improve your situation in life are created when people take an attitude that they must have everything immediately. As an example, it took me 3 years to save enough money to purchase our first home computer when others were going into debt to get one right away. That's part of the personal responsibility to separate wants from needs. Cell phones, tablets, big screen TV, etc. are all wants. Another cause is the greedy investor who insists that 5 to 10% profit is not enough and wants costs kept down either by only paying minimum wage or by moving jobs overseas.