Thursday, June 02, 2005

Collins Favors Minority Youth Unemployment

As a guest on "Charlottesville Live" this morning on WINA-AM, Rich Collins, a candidate for the Democratic nomination to succeed Mitch Van Yahres in the 57th District seat in the Virginia House of Delegates, said that he favors "doubling" the current minimum wage in this state from $5.15 per hour to more than $10 per hour. He defined this new minimum wage as a "living wage" necessary to pay for "food, education, and housing."

Apparently Mr. Collins wants to prevent poor black kids from getting their first jobs, since that would be both the immediate and long-term result of his proposal.

It is hard to find an economist who disagrees that when the government raises the minimum wage, some jobs are lost. In the 1930s, when the first minimum wage law took effect (in this case, among forestry workers in the Carolinas), over 3,000 workers immediately lost their jobs. The historical experience has been the same ever since. Every time the minimum wage rises, thousands of Americans either lose their jobs entirely or see their hours cut back, their fringe benefits cancelled, or -- in the most dire situations -- their businesses closed.

This adverse effect of the minimum wage has its most palpable, lasting effect among young black men in the nation's inner cities. The problem is not so much the workers who are fired, but those who are not hired in the first place. The bottom line is: Businesses faced with an artifical rise in costs will cut back in whatever way they see fit. Since in this case labor costs are artificially increased, labor is the logical thing to cut. As a result, businesses decide not to hire that high school student saving money for college. They choose not to hire the young man trying to emerge from the drug culture. They don't hire the teenage mother who wants to make a life for herself and her child.

Who suffers? Not the labor union members whose leaders are the most vociferous proponents of a higher minimum wage. Those who suffer are the young people who need that vital first job if they are ever going to advance in business and in their communities. These are the people who will not learn basic skills, will not acquire important work habits, will not make the connections with employers and co-workers that we all need for success.

The fact is, fewer than 3 percent of minimum-wage workers are the sole or primary wage-earner in a family. The fact is, 60 percent of minimum-wage workers earn more than the minimum after nine months on the job. The fact is, as the New York Times put it in an oft-quoted 1987 editorial, the best minimum wage is "$0.00."

Lest anyone doubt that the Old Gray Lady actually said that, here's an excerpt from a speech on the floor of the U.S. Representatives by California Congressman Christopher Cox, named today by President Bush to be the new head of the Securities and Exchange Commission (SEC). This appeared in the Congressional Record on April 23, 1996 (page H3703):

Let me read from that editorial in the New York Times which was titled, 'The Right Minimum Wage: $0.00.'

'Anyone working in America,' the New York Times says, 'surely deserves a better living standard than can be managed on the minimum wage.'

I think we can all agree with that.

But there is a virtual consensus among economists that the minimum wage is an idea whose time has passed. Raising the minimum wage by a substantial amount would price poor working people out of the job market, people like Joanna Menser, whose remarks we just heard.

'An increase in the minimum wage,' the New York Times wrote in their editorial, 'would increase unemployment.'

Let me repeat this line from the New York Times editorial: 'An increase in the minimum wage would increase unemployment, raise the legal minimum price of labor above the productivity of the least skilled worker, and fewer will be hired.'

'If a higher minimum wage means fewer jobs, why does it remain on the agenda of some liberals,' the New York Times asked.

'Those at greatest risk from a higher minimum wage would be young poor workers who already face formidable barriers to getting and keeping jobs.'

They conclude their editorial in the New York Times as follows:

'The idea of using a minimum wage to overcome poverty is old, honorable, and fundamentally flawed.'

Living wage? Like any minimum wage, it's simply a recipe for unemployment at the lowest rungs of the economic ladder. It's good intentions gone awry with disastrous consequences. It may be summertime, but the "living" ain't easy.


Waldo Jaquith said...

Though to be fair, Rick, aren't you opposed to any minimum wage?

Rick Sincere said...

Well, yes. Any worker should be able to contract with any employer any price they are willing to charge. But a "minimum" wage of more than $10 an hour would be disastrous, by displacing those workers who most need jobs. That's why that comment on the radio this morning caused me to prick up my ears.

Anonymous said...

First, Collins advocates punitive taxation for new homeowners, then he says he wants to do away with growth in the Charlottesville area. Now he wants to get rid of low-income jobs, which in turn will get rid of low-income workers. Collins may think his policies will promote the general welfare -- but the rest of us have to ask precisely whose general welfare this man is promoting.

It sounds like a rich White man's agenda to me, and I can't say I'm surprised. I used to think Collins would be a viable candidate in the House race, but I know better now. Rich Collins is just another university elitist disguised as a man of the people. I wonder if he even knows what the people of Charlottesville look like.

Anonymous said...

"Punitive taxation for new homeowners"? I'd call it equitable taxation for all homeowners.

Why should new homeowners get the benefit of infrastructure that's been paid for by the taxes of long-term, stable residents, without having to pay for it? Schools, fire stations, sewers, roads, all already in place. Why is it unreasonable to ask that new residents pay their fair share.

If property reassessments were done at the time of sale only, you'd have an implicit agreement as to values. That is, a buyer has acknowledged what the value of a property is, by paying that price.

Ending the growth tax would just put property taxes on the same footing as capital gains taxes. You don't pay higher taxes for "paper gains"; you wait until the gains are realized.

Fair's fair.

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