The future: a $15 an hour minimum wage and more 100 degree days?

The House of Representatives passed a bill recently that would increase the federal minimum wage from the current $7.25 an hour to $15 by 2025. Proponents call this a “living wage.” The House vote was 231-199 with 3 Republicans supporting it and 6 Democrats opposing it. 

It’s not breaking news that raising the minimum wage to $15 per hour is a divisive and hotly debated topic. What’s lacking is any sensible reason to do this, unless you consider vote buying as sensible.

Most minimum wage earners are younger and just entering the world of work. The Bureau of Labor Statistics reports that in 2018 only 2.1 percent of all hourly workers earned the minimum wage, or less. These workers tend to be under 25 years old and work in the food and hospitality industry.

The younger minimum wage workers generally do not require a “living wage,” as many still live with their parents or are college students, and few are the head of a household.

As with other work, some minimum wage workers are really good, some are okay, and some aren’t good at all. But a $15 minimum wage means that the best and worst employees in minimum wage jobs will earn the same $15 wage, which nets out at $31,200 a year for a 40-hour per week full-time job. 

As a matter of sound economics, government should not dictate minimum wages or any wages, other than for government workers. But should this become law, government will have increased the payroll expenses of virtually every business in the country.

While minimum wage workers will reap significant benefits from the increase, business owners will face mandated increases in payroll expenses. For a business to operate successfully it must have more income than expenses. This makes achieving that goal more difficult.

Every employee who was making more than the old minimum wage will get a raise to the new minimum. Those making above the minimum should also get their additional wages added to the new minimum, or they will not be happy.

Where will that money come from? Likely sources are higher product and service prices; reduced employee hours; fewer employees and perhaps more computers and robots. And, if these solutions are not sufficient to maintain profitability, businesses will close and jobs will be lost.

A July report from the Congressional Budget Office estimates that up to 3.7 million Americans would lose their jobs if the minimum wage were raised to $15 per hour by 2025.

Vermont Sen. Bernie Sanders, who claims to be an Independent, but is seeking the Democrat presidential nomination, claims the $7.25 minimum is “starvation wages.”

But – surprise, surprise – Bernie does not practice what he preaches. After his statements supporting a $15 minimum wage and raising the minimum above the “starvation” level, many of his campaign workers began complaining that he isn’t paying them at that level. 

It was reported that henceforth campaign workers will be paid at least $15 an hour, but some would have their hours reduced to keep wage expense down. 

Boom! Reality hit the Sanders campaign. But will Bernie learn the economics lesson, or continue to peddle the false narrative that every working person needs to make at least $15 an hour in order to stay alive?

However, because of all the harm this measure will do to the economy, the Republican-controlled Senate will almost certainly vote against the legislation, saving jobs.

In other news, a recent story in a South Carolina newspaper predicted that “by the middle of this century, the number of sweltering days in the Palmetto State is forecast to increase by more than 350 percent if little or nothing is done to stop man-made climate change,” and by “the end of the century, the increase could approach 600 percent.”

Global warming advocates will readily endorse this prediction, especially after last weekend’s very warm temperatures and heat indexes of 100 degrees or more. 

This discomforting prediction comes from a report by the Union of Concerned Scientists (UCS) showing that the United States is heating up rapidly due to climate changes, which these scientists attribute to human activities.

Increases in the number of days with extreme, dangerously hot weather can be expected to rise sharply in hundreds of cities across the country, the researchers say.

The UCS says it’s already too late to prevent all of the rising heat, but the country can slow down the trend with aggressive action to halt man-made global warming. The UCS did not propose that the nation adopt the wild and crazy Green New Deal, but conceivably might do so at some point.

If humans are causing this warming, can the United States really do enough to stop it? We have led the world in carbon emission reductions for years. Other nations, China and India, to name two, not only are not reducing carbon emissions, they are increasing them.

Why are Americans expected to sacrifice jobs, lifestyle and amenities to try to stop global warming? We must demand that the rest of the world, particularly China, India and the other culprits, catch up with our progress on emissions, and not punish ourselves.

Repairing the damage of regulatory over-reach: so far, so good

Is the fact that overregulation kills economic growth one of the country’s best-kept secrets? Or is it perhaps that the effects of overregulation are not widely understood or discussed. With all that’s been going on – the tax bill, the government shutdown, everything President Donald Trump says, does, wears, tweets or thinks – showing the downside of too many regulations and too much government doesn’t attract nearly as much attentions as it should.

A huge number of Americans don’t understand how over-regulation negatively affects the economy, and quite a few subscribe to the idea that in order to keep greedy businesses in line, more regulation is needed. This condition provides bureaucrats and politicians to hurt the people they exist to serve by putting harmful regulations into effect.

Every regulation businesses have to follow costs them money, increases the cost of products and services to customers, and makes operating a business profitably more difficult. Every dollar spent on non-productive and unnecessary regulatory compliance is a dollar that can’t be used for higher wages, better equipment, expansion and other beneficial things.

Trump pledged to get rid of two existing regulations for every new regulation, which has never been done before. The actual reduction in regulations last year was even better than two for one, and the economy has shown its appreciation through job creation and higher GDP.

Maurice McTigue, Vice President of the Mercatus Center at George Mason University, says that in addition to millions of Americans, many of those serving in Congress also don’t understand the economic effects of over-regulation. And he said “the pace of regulatory reform going on today is faster than at any time since the Reagan Administration.”

Research from Mercatus shows that if regulations since 1980 had just been held at that level, the economy would have been 25 percent larger by 2012. But regulations grew to the point that in 2012 the economy was $4 trillion smaller than it would otherwise have been. That works out to the equivalent of 32 million lost U.S. jobs.

If that lost $4 trillion was a country’s economy, it would be the fourth largest economy in the world, McTigue wrote.

One area where reducing regulations has had beneficial effects is in coal country. Last October Fox News reported coal production was down 31.5 percent over the last 10 years, but was up 7.8 percent to that point in 2017.

Politifact noted that Fox had under reported the numbers, using projections rather than actual figures, which show production was actually 12 percent higher than at the same point the year before, and the decline over the last 10 years was closer to 33 percent.

“According to the Energy Information Agency, West Virginia coal production year-to-date is up 20 percent over the same period last year,” West Virginia Coal Association President Bill Raney wrote last November, “and we appear on target to possibly cross the 100 million ton level for the full year.”

“Even so, we remain a long way from the 170 million tons we produced in 2008, before the Obama Administration began its war on coal. And we may never get back to those levels, because most of those 400 coal-fired power generation units Obama shut down with his regulatory assault have been torn down, left to rust or converted to natural gas,” Raney continued.

“The good news is the world never stopped recognizing the value of coal, and 2,200 new coal-fired power plants are scheduled to go online between now and 2040. Many of those plants will look to import their supplies and we plan to be the source of much of that coal.”

“But none of this would be possible without the 2016 election of President Trump,” Raney acknowledged. “He has one-by-one rescinded every anti-coal regulation enacted by the Obama Administration, and he continues to do more. Just recently, his Department of Energy issued a report that said it is vital for the U.S. to preserve its coal fleet for the sake of the stability and reliability of the electric grid.”

In a state as badly damaged by regulatory warfare as any in the nation, West Virginia is dramatic evidence of both the horrors over-regulation causes and the benefits of getting rid of harmful government interference. West Virginia’s unemployment rate has fallen from double digits in late 2016 to 4.4 percent in November.

Think what you will of Donald Trump, but he has been in business for a while, and he has been successful at it. And because of his experience, he knows that a prosperous nation needs successful and thriving businesses to provide needed and wanted goods and services, as well as the jobs that provide people the money they need to purchase those things they need and want, and to live a decent life.

Regulatory reform and improvements to the tax system have already produced positive results in the economy, pushing unemployment to much lower levels than they have been for a while and pushing productivity to respectable levels after many years of unsatisfactory performance.

We should be appropriately pleased with the good things happening in our country today, not overly critical of the person who has allowed them to occur.

Looking at the U.S. performance in the 2016 Index of Economic Freedom

The 2016 Index of Economic Freedom shows that the United States has climbed one notch from 12^th place to 11^th among the 186 nations of the world that were surveyed and rated.

The Index is an annual guide published by The Wall Street Journal and The Heritage Foundation, and rates nations for labor freedom, business freedom, and fiscal freedom. There are 10 different measures inside those three major groupings. Data used is from 2014, and was compiled and analyzed last September.

The nations with more economic freedom than the U.S. are, starting with first place: Hong Kong; Singapore; New Zealand; Switzerland; Australia; Canada; Chile; Ireland; Estonia; and the United Kingdom.

Ranking 11^th over all and 2^nd among the three North American nations, the U.S. “remains mired in the ranks of the ‘mostly free,’ the second-tier economic freedom status into which it dropped in 2010,” the introduction to the report states. In seven of the past eight years Americans have seen their economic freedoms decline, and this year’s score equals their country’s worst score ever in the Index. At 75.4 out of 100 points, the U.S. has seen its score drop 0.9 since 2012, and from 80.7 since 2009.

“America’s historically vibrant entrepreneurial growth is significantly hampered by intrusive, expensive, and often ineffective government policies in areas ranging from health care to energy to education,” the report states. “Government favoritism toward entrenched interests has hurt innovation and contributed to a lackluster recovery and stagnant income growth,” even though a private sector energy boom has put the U.S. at the top of the world’s producers of oil and gas.

While America’s 6.2 percent unemployment rate in 2014 has improved, GDP growth was an unimpressive 2.2 percent over five years from 2009 to 2014. Our public debt then was nearly 105 percent of national GDP, which means that if every dollar of production – the value of all final goods and services produced in a year – went to pay down the debt, we still would have debt.

One small piece of good news is that in the Rule of Law category the “Freedom From Corruption” rating rose from 72 to 74 from the prior year, but the “Property Rights” rating dropped 10 points from 90 to 80, and this year produced the lowest ranking of the American people’s trust in government in the last 10 years, based on polls taken in 2015, where 75 percent of respondents said they believe corruption is widespread in the government and in government regulation of business.

Taxation continues to bedevil America’s freedom standing, with more than one of every four dollars of domestic income being taken by taxes, the U.S. having one of the highest corporate tax rates on the planet at a punishing 35 percent, and the top individual income tax rate of 39.6 percent. Government spending runs just short of 40 percent of GDP, and the size and scope of the government remains too big and too intrusive. The “Government Spending” and “Fiscal Freedom” ratings each fell, 59.6 to 54.7 and 67.5 to 65.6 respectively.

The nation saw substantial declines in the Regulatory Efficiency category, where each sub-category saw declines: Business Freedom - 91.9 to 84.7; Labor Freedom – 95.1 to 91.4; Monetary Freedom – 84 to 77. The report notes that “180 new major federal regulations have been imposed on business operations since early 2009 with estimated costs of nearly $80 billion,” explaining that the regulations themselves are not rigid, but that policies, such as excessive occupational licensing, restrict employment opportunities, and “damaging monetary policies, tangled webs of corporate welfare, and various subsidies” have affected the economy negatively.

The U.S. was heavily affected in two of the three sub-categories of Open Markets, where “Trade Freedom” remained essentially flat at 87 points, but “Investment Freedom” and “Financial Freedom” each took a 10-point hit, falling from 80 points to 70. The report notes that while “domestic regulations have been emerging only gradually, the financial reforms adopted in 2010 have increased both costs and uncertainty.”

Even though the U.S. moved up one position among the 186 nations, being 11^th instead of 12^th does not provide enough for even Donald Trump to brag about, especially in view of the fact that the overall score fell nearly one point and that the U.S. lost ground in 8 of the 10 sub-categories contained in the Index. And its position in the second tier may prompt a drive to change our “land of the free” motto to “land of the mostly free.”

The importance of this report is not so much the U.S. ranking, but the continued commitment of its government to policies contrary to the values that made America exceptional and free. This perspective is not merely the view of conservatives and libertarians, but also of someone who has seen this same scenario up close and personal.

Filmmaker and American citizen Agustin Blazquez saw this same theme play out in his native Cuba, and warns, “Wake up, America!” Blazquez sees the same radical shift happening in America that turned Cuba into a communist country.

This ought to be a call to action, but thus far all of those have failed.