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"Government is not the solution…it is the problem" -Ronald Reagan



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Long term solutions needed for wage issue

Posted by Stephen on February 9, 2007

The issue of greater wages for people is of significant concern to me. I once lived out of my car because my job wasn’t paying enough for me to afford a place to live. I have managed businesses where my customers were those struggling to put food on the table.
 
What is most frustrating to me, however, is that many of our political leaders spend more time and energy focusing on the problem instead of investing in long term solutions. Then, when the issue becomes critical to them politically, their solution is to place a band aid on an open wound by increasing the minimum wage. It’s a biscuit they throw to a starving public.

Unfortunately, when this band aid doesn’t solve the problem the medicine they propose comes in the form of larger government mandates and entitlements. It is a path that exists in complete contradiction to everything that we promote in the same free market environment that has made America the land of opportunity.
 
In a column in The New Dominion, entitled Addressing the minimum wage, Northern Virginia state delegate Brian Moran, the chair of the Democratic caucus in the Virginia House of Delegates, said, “The disparity between working families and the rich has continued to increase. Raising the minimum wage is at least a small step toward trying to provide some fairness to working families.”

I would disagree with Delegate Moran’s thesis. I don’t believe that moving from 5.15 to 7.50 will have any impact at all in addressing the gap between the wealthy and the poor. In fact, I believe it will actually hurt the ability for those on the lower rungs of our economic base from gaining ground on higher wage earners. Government does not have the ability to artificially drive wages, they can only prop them up, which will do nothing to create an atmosphere for market driven increases to develop, and therefore provide no long term solution.
 
Those that truly need more money would be much better served if Government would work harder on finding steps that would allow them to get out of the way. The free market has built this country and has always driven wages through good old competition and expansion. Let government focus on the deregulation of the small business. Eliminate the requirement for small businesses to pay a minimum wage and, at the same time, encourage them to do so by providing tax credits and incentives to all businesses that meet a certain agreed-upon living wage, or minimum wage.

What about the wage gap?

Many people are concerned that those at the top of the wage scale are hurting those at the bottom, as though they are in competition for the same jobs, or are pricing lower income individuals out of the job market. Still others point to the corporation and manufacturing industries and state that they are looking for reasons to pay as little as possible, and in many cases are moving jobs overseas. This side states that exporting jobs is not only decreasing job opportunities, but are also driving wages down.

However, Daniel Griswald, an economist for the Cato Institute, writes that the latest U.S. Labor Department Report supports different findings. The U.S. economy continues to create new jobs at a healthy clip. U.S. payrolls increased 132,000 in November and we maintain a low unemployment rate of 4.3%.

I have run across those that point at those figures and argue that the numbers are skewed and that the reality is that most of these jobs are low wage jobs.

Looking at the numbers a little closer we find that in the past year, total payroll employment has jumped by 1.8 million. Since mid-2003, payroll jobs have grown by 6.2 million, and since 1990 total payroll jobs have grown by 27 million. Griswald states “That impressive job growth has occurred against a backdrop of rising U.S. trade with the rest of the world, so clearly trade does not mean fewer jobs for American workers.”

As for wage concerns, Griswald reminds us that “They too are rising again, according to the same labor-market reports. Average wages are up 4.1 percent from a year ago, ahead of inflation. When benefits are added, total compensation for U.S. workers continues to rise faster than inflation and is up significantly in real terms compared to previous years.”

Solutions that target the long term

I do believe we need to focus on equality…free market equality. What we need to do is work to free small businesses from over regulation by the federal government, while asking corporations to invest properly in their own success. For example, there’s nothing equitable about demanding that tax payers fund subsidies to billion dollar and trillion dollar corporations. There’s nothing fair about big business using loop holes to avoid paying any form of taxes on their income, and there is certainly something wrong with a system that forces the tax payer to pay for environmental messes that the big business creates.

In a little bit of a side note; if corporate America paid taxes on just 1% of their income we could institute a flat tax of 16% which would not begin until the $40,000 dollar mark. We could increase the earned income credit, eliminate the death tax, and shrink the 468 page tax code to 5 pages.

I want millionaires to make billions and billionaires to make trillions, but there is no reason they should be allowed to abuse a system to do so. Furthermore, we cannot continue to allow big business to create destructive forces in the market that target competition, especially when that competition comes in the form of the sole proprietor, partnership and otherwise small businesses.

Finally, the great myth sold to the American consumer is that if corporations and big business are forced to pay for issues mentioned above they will increase the prices of their goods and services and no one will be able to buy anything. Corporations and big business is not in the business of preventing consumers from purchasing from them. It’s not a logical argument, but it is a fear tactic that they have used quite successfully for some time.
 
In the end it’s simple, sort of. Less corruption of the free market system, less government regulation and intrusion, and more opportunities for small business to expand will increase competition, drive wages and provide more opportunities for people to succeed.

Why couldn’t I just say that in the first place….

Stephen Winslow is the executive editor of Conservative Viewpoints.

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