Most rational people might think that in today’s economy, with 9.4 percent unemployment rates, that workers would be happy to see a business putting their fellow laborers to work. That would not be the case for Carpenters Local No. 1319 of Santa Fe.
Instead, the union is protesting (subscription required) the fact that Lone Sun Builders is doing renovations on the Hotel St. Francis using non-union labor. The owner of Lone Sun Builders, the heroic Chet Karnas, said of his company and its workers: “No single individual in this company makes less than $11 an hour. Not one person. He also provides an ample benefits package including health care, a 401(k) plan with matching contributions, and life insurance.”
He and two other Lone Sun employees held a banner that said, “Employee benefits and great wages. Our benefits: Health, dental and life insurance. Health reimbursements, pension and retirement. Sounds like a real shady outfit to me. The unions hate nothing more than employers who treat their workers right without giving them a cut of the action. Here’s to you Mr. Karnas! Oh, and next time I recommend a hotel in Santa Fe, I’ll be sure to recommend Hotel St. Francis.
Most economists worth their salt oppose government wage mandates for the simple fact that politicians have much less knowledge about what a “fair” wage is than do employers and workers making decisions in a free economy. Santa Fe’s “chickens” of government-mandated wage inflation are now coming home to roost. In fact, business owners in the City Different are organizing to make a last stand against the 30-cent increase in the wage which is set to take effect at the end of January.
Business owners say that raising the wage in a strong economy is one thing, but with economic growth slowing dramatically generating increased unemployment and mainstream economists concerned about deflation, a free market would see wages shrink, thus naturally sucking marginal workers into the employment market albeit at marginally lower wages. Unfortunately, mandated wage rates disproportionately harms teens and low-skilled workers.
Santa Fe made a mistake in mandating wage rates that are far above market levels. Unfortunately, business owners and marginal workers will be the ones feeling the pain.
During times of strong economic growth, the politics of the minimum wage seem to tilt in the direction of “higher and faster.” After all, when unemployment is at historical lows and job growth is strong, we all feel like wages should be rising.
Now, as the economy weakens, we see the proverbial “chickens” of artificially-mandated wages coming home to roost. This is not a theoretical proposition. My 17 year old cousin who worked for an above-minimum-wage salary last summer, has been unable to find a job this summer. From the looks of recent news stories, he is not alone.
Investors Business Daily recently editorialized of the impact of the recent minimum wage increase on teenage unemployment and how these policies have helped spur teen joblessness to its highest level in 60 years. Rather than enacting additional government programs to deal with the “crisis,” Congress and the New Mexico Legislature need to repeal recently-passed (and economically-harmful) minimum wage hikes.
This article about a new Wal Mart being built in Edgewood, NM, really caught my attention. In the article, it was revealed that the Edgewood Schools have lost three bus drivers to the retailer, with as many as five additional employees considering a job move. Wal Mart plans to hire as many as 400 people in this town of about 2,000.
Clearly, if people are making the move from government jobs to Wal Mart, then America’s largest retailer must not be paying the “slave wages” critics so often accuse them of.
And don’t assume that the public schools in New Mexico don’t have adequate resources to pay bus drivers and other professionals, because they do. First and foremost, as the Rio Grande Foundation has shown in a recent study, education spending in the state is higher than that of our neighbors. New Mexico also spends more on administration and other expenses “outside the classroom” than any other state in the nation. Perhaps it is being mismanaged, but that is nothing new.
The fact is that Wal Mart pays competitive wages and will be a boon for Edgewood residents who will have access to inexpensive goods. That is the free market at work.
Maryland has already made headlines this year by passing the nation’s first “living wage” bill. Fortunately, the bill only forced government employers (and not your average business) to pay the absurd cost of $11.30 per hour.
Unfortunately, Howard County wants to pass an even higher living wage bill. One of the prime arguments is that such an increase benefits low income families. Yet, as Santa Fe has shown us, all it does is increase part-time employment (primarily low income workers) and force those with the least education (also primarily low income workers) out of their jobs.
We can all rest assured that when the continued plight of low income families comes to light, regulations will once again target “unfair business practices” instead of dealing with the real issue. After all, there’s always something to blame on them.
Continue reading “Maryland Follows in the steps of Santa Fe”
As recently as earlier this year, I was willing to give the global warming crowd the benefit of the doubt and at least consider that reducing one’s “carbon footprint” might be a good thing. But alot has happened since then and I’ve been educating myself on the issue. Sometimes, given the “debate” going on in the mainstream media, it seems like this is what passes for debate.
This quiz is one creative way to dig deeper beyond the surface and figure out what you know about the issue.
Needless to say, while I recycle and drive a small car for my own reasons (recycling is REALLY easy and I’m cheap, so I like smaller cars) the hypocrisy of folks like Al Gore makes me wonder what his real agenda is….don’t give me any garbage about “carbon offsets,” you either live this stuff or you don’t. You can’t buy a clean conscience.
The thing that really makes me wonder is the longer perspective. We’ve had climate scares for generations (hot and cold), not to mention the malthusians who constantly harp on population and the supposed fact that earth simply cannot support more people, regardless of the fact that it continues to do so.
Recently, Albuquerque became the fourth city in the nation to impose its own local minimum wage, following the lead of Santa Fe despite the well-documented harm to The City Different’s low-skilled workers. Before we can begin to measure the effects of this mandate on the state’s largest economy, Governor Richardson is set on imposing this scheme on the entire state, and the state Legislature has been happy to comply.
For a glimpse of what this policy holds for New Mexico’s future, all we need do is look to our neighbors to the west. Arizona’s state-wide minimum wage of $6.75 per hour has been in effect for just six weeks, but already the negative, yet foreseen consequences are beginning to show themselves: “cutting hours, instituting hiring freezes and laying off employees,” preventing inexperienced and low-skilled workers from gaining the experience and skills they need to move up in the labor market and earn higher wages.
Some of us learn this lesson the hard way. For me, the 1996 increase in the Federal minimum wage meant fewer hours flipping burgers at Dairy Queen in high school, the evening shift trimmed from three cooks to two. And some of us never learn–it wasn’t the minimum wage that kept a young Bill Richardson from being drafted to play professional baseball. But hey, he’s doing “what’s right for the working men and women who drive our economy.” Even if that means putting them out of work.
New Mexico politicians and Governor Richardson in particular, should heed the unspoken advice of Speaker Pelosi: Mandating wage hikes reduces jobs for the unskilled and raises the cost of doing business. That is what Pelosi undoubtedly had in mind when she exempted American Samoa from recent minimum wage legislation on behalf of some tuna canners with headquarters located in her district.
Last night, Bernalillo County became quite possibly the only county in America to set its own minimum wage above the federall rate. The fact that minimum wages are bad policy has been mentioned repeatedly at this site and by the Foundation in general.
The fallacy of minimum wages is repeated in the example cited by the Tribune and Journal in their write-ups of the wage hike. Victor Rivera, a 15 year old that spends his weekends working 11-hour shifts on a construction site outside Albuquerque and supposedly gives all the money to his mother to buy the basics for the family, makes the minimum wage. According to convential wisdom, Rivera is obviously being underpaid by his employer who could easily pay him $6.75 or even $7.50 per hour.
In reality, Rivera could easily lose his job if his current employer decides that this young man is not worth more than $5.15 an hour. That would make it even more difficult for mom to buy necessities and put groceries on the table. Maybe the employer will suck it up and pay the higher wage while cutting elsewhere or maybe not. My 15 year old cousin has been looking for a job at $5.15 an hour and can’t find one. It will be even more difficult for him as the wage rate rises as this miguided law takes effect.
It’s not just the governor. Now Bernalillo County is considering a new minimum wage law:
The county proposal, calling for a minimum wage of $6.75 per hour on Jan. 1, will be formally introduced Tuesday at a County Commission meeting.
It will be sponsored by Alan Armijo, chairman of the commission. He said it makes sense to have the same minimum wage beyond the city limits.
“We’re part of this community and need to be consistent,” he said.
After starting at $6.75, the minimum-wage figure would increase to $7.15 the following year, and to $7.50 on Jan. 1, 2009— just like in Albuquerque.
In response to a similar proposal in Missouri, David Neumark (a leading scholar in the field of labor economics and professor of economics at Cal-Irvine) has recently discussed the minimum wage debate in terms non-economists can understand. Here is part of his summary:
The evidence from a large body of existing research suggests that minimum wage increases do more harm than good. Minimum wages reduce employment of young and less-skilled workers. Minimum wages deliver no net benefits to poor or low-income families, and if anything make them worse off, increasing poverty. Finally, there is some evidence that minimum wages have longer-run adverse effects, lowering the acquisition of skills and therefore lowering wages and earnings even beyond the age when individuals are most directly affected by a higher minimum.
It would be nice if our wishful thinkers would consider these economic realities.