Argument for killing minimum wage perpetuates urban myths
Most poor people don’ t work for a living so the government should just get rid of the minimum wage. So says the top economist for a group that calls itself, “The voice of small business.”
William Dunkelberg, chief economist and spokesman for the National Federation of Independent Businesses, also says the economy would really thrive if government stopped limiting negotiations between businesses and employees.
As for all of the paperwork that comes with unemployment insurance and Social Security, well, it only takes away from business owners making money, so get rid of that too. “Government is a big weight on our use of resources,” headded.
No minimum wage “would be a great idea ,” he said during a formal meeting his group requested with the Chronicle’s editorial board .“A lot of jobs would happen. People who wanted to work would be able to work .”
“Show me that you can produce $15 an hour in value, and then I’ll pay it,” he added. “Most poor people don’t work, they are on welfare of one kind or another, so the minimum wage doesn’ t impact them.”
If Dunkelberg were just another wealthy curmudgeon at the country club bar complaining about the world, it would be easy to sh rug him off. But Dunk el berg spends much of his time lobbying the corridors of power, and N FIB makes campaign donations through a political action committee to influence lawmakers in Washington and Austin.
“Being a very political organization, no surprise, (NFIB) made their base as big as possible, andthat includes 99.7 percent of employer companies in the United States with fewer than 500 employees ,” he said. It also includes 21,000 members in Texas.
Dunkelberg’s facts, though, are a perpetuation of urban myths spread by self-proclaimed freemarket economists for decades, much to the detriment of the country ands mall businesses.
Almost half of poor Americans — 20.1 million out of 45.3 mil---
lion — are either children or elderly, according to the Bureau of Labor Statistics. Out of the remaining 25.2 million, about 10 million have full- or part-time jobs, and that’ s where Dunk elberg’s analysis conveniently stops.
Dig a little deeper, though, and8.8 million of the nonworking poor are either retired, going to school or disabled. Morethan3.3 million are actively looking for jobs.
The majority of poor Americans are not the welfare-collecting slackers Dunk el berg would have people believe. And as for welfare, able-bodied adults without children in Texas can only receive food stamps while undergoing job training or working.
Economists and politicians have fought for decades over whether the government should mandate a minimum wage. Both sides can trot out detailed academic studies to support their position, but real world evidence is found in American history.
President Franklin D. Roosevelt started the federal minimum wage during the Great Depression to stop the exploitation of desperate laborers and boost the economy .“No business which depends for existence on paying less than living wages to its workers has any right to continue in this country,” hesaid.
The boo ming economy that followed lifted the average American worker and created the middle class. There are many explanations for why the economy boomed following World War II, but the minimum wage ensured that the new wealth was widely distributed and not concentrated in only a few hands, something I’ve seen in dozens of developing countries without labor laws.
The inflation-adjusted purchasing power of the minimum wage peaked in 1968. Toreturn to that level, the minimum wage today would need to be $9.54. If you consider that higher education levels and new technology make workers more productive now than in 1968, the productivity-adjusted wage should be about $12.
Dunk el berg, though, consider saw age requirement “at axon customers” because it raises prices. “The minimum wage doesn’t raise spending in the market, every dollar a minimum wage worker gets comes out of someone’ s pocket,” he explained.
In truth, low wages drive up real taxes onall of us.
A full-time minimum wage workers only makes $15,080 a year, usually without benefits. A person at that income level must rely on food stamps and charity health care to get by, both of which are funded by taxpayers. Low-wage workers also get the earned income tax credit, which can total another $4,000 a year in taxpayer subsidy.
While consumers can choose how many hamburgers they buy at what price, they don’t get to choose my taxes. Higher wages would alleviate these government programs.
Dunk el berg may have economist in his title, but he’s really just another lobbyist, paid to persuade lawmakers and the public to cut taxes and regulations. Tomlinson is the Chronicle’s business columnist. His commentary appears on Sundays and Wednesdays. He also posts a daily news analysis at HoustonChronicle.com/Boardroom. chris. tomlinson@chron.com twitter.com/cltomlinson