By: Merrill Matthews
December 16, 2013
President Obama is on a death march to increase income inequality in America--as if it hadn't already increased enough during his presidential tenure. Forget all of the president's prattle about the middle class. Every economic policy he has imposed on the country, including Obamacare, will exacerbate income inequality. This time his preferred weapon of mass income destruction is the minimum wage.
Democrats are suggesting a rise in the minimum wage from its current $7.25 an hour to $10.10. That's even more than Obama's $9.00 proposal, but significantly less that the $15.00 minimum wage recently passed by SeaTac, the small town by Seattle's airport. Hey, when was the last time Obama was the reasonable one in the room?
Liberal economists are turning out in droves to claim that raising the minimum wage won't hurt low-income jobs. But the more cautious ones hedge their language significantly.
Laura D'Andrea Tyson, former chairwoman of Bill Clinton's Council of Economic Advisors, just wrote a defense of an increase, but couches it in weasel words, "The weight of the evidence consistently finds no significant effects on employment when the minimum wage increases in reasonable increments." Queue "significant" and "reasonable."
Economists tend to speak in probabilities and percentages rather than absolutes. So there is nothing wrong with saying that a small minimum-wage increase probably has very little detectible economic impact (note "probably" and "detectible"). Just as most of us probably wouldn't be deterred from buying a $10.00 item if its price went up by one or two cents--but we would if the price doubled.
But Tyson is intentionally hedging her words in a way that allows her to defend her statement among colleagues while giving a green light to readers who want to believe a minimum-wage increase has no economic impact. She should be flashing a minimum-wage yellow light instead.
At least she's honest enough to concede, "Businesses would also pass some costs on to their customers in the form of higher prices." Spoken like a true liberal who won't be the one losing her job and makes so much money she doesn't mind paying a little more.
What the minimum wage does is price the least-skilled workers out of the market; and the higher the increase, the more people it relegates to joblessness. Liberals claim that a $2.00 or $3.00 bump isn't that much, but there's more to the story.
Because it's not just the minimum wage; it must be combined with other programs--especially Obamacare.
Starting next year--unless the president unilaterally decides to delay it yet again--employers with 50 or more employees will have to start paying for health insurance, or cough up a $2,000 fine per employee.
Full-time, minimum-wage employees make about $15,000 a year. The Kaiser Family Foundation's 2013 survey found that employers currently contribute, on average, about $4,800 toward employees' individual health insurance premiums. That means Obamacare will force employers to give minimum-wage workers an increase--32 percent in total compensation if they follow the average--or they will pay a fine of about 13 percent.
Now add to the employer's cost for Obamacare an extra $2.00 or $3.00 an hour for the minimum wage increase. Would those two together violate Tyson's "reasonable increments"?
And, of course, employees would in most cases have to pay part of the premium--about $1,000 per year, according to Kaiser--which comes out of the employees' pocket.
So there would be fewer low-income workers gainfully employed, and those who were would have less take-home pay (because of their portion of the insurance premium). But we aren't done yet.