Trump is wrong, wages are not too high
Republican front-runners flubbed the question about minimum wage
OMILWAUKEE, WISC. utside the massive Milwaukee theater, venue of Tuesday’s 4th Republican presidential debate, were the noisy protesters marching for a hike in the federal minimum wage to $15 an hour. They held up signs chanting “Fight for $15.”
Inside the great hall Donald Trump, who boasts of having a net worth as high as many small nations, is asked by debate moderator Maria Bartaloma of Fox Business News whether he favors raising the minimum wage. Of course the only sane answer to that is no. The government shouldn’t price low-skilled workers out of the job market. And Ben Carson was right that black teens are the frontline victims of the minimum wage. This is economics 101.
Mr. Trump responded by saying “unfortunately no.” If only he had stopped there and moved on to some other subject. Because his reasoning couldn’t have been worse. He told working class Americans “wages are too high” and that’s why we “can’t compete.” Groan. Does Mr. Trump even fathom how hopelessly out-of-touch and callous this makes him sound? A billionaire who flies in a helicopter or a lear jet to work says wages for the little people who drive Mazdas are too high. Was he intentionally trying to chase middle-class blue collar voters into Mother Hillary’s waiting arms?
Next up was the other Republican frontrunner Ben Carson who only got it half right. He sounded like Cruella De Vil when he opined that we need “lower wages” to bring down unemployment. Ugh. That may be technically true in the short term. But these two Republican front-runners completely flubbed this question and it’s one that isn’t going away. They missed the opportunity to bash President Obama’s misery-inducing policies.
What they should have said is that wages are too low in America, not too high. Labor Department data tells us about half of Americans haven’t had a pay raise that keeps pace with inflation in eight years. There are many reasons for that abysmal record, but not the least of them are Barack Obama’s tax, regulatory, borrowing, health care and monetary policies. They have flattened the middle class and these workers deserve a raise.
The problem here for the middle class isn’t that the minimum wage is too low. For the umpteenth time, only about 4 or 5 percent of workers are paid minimum wage and most for six months of less. Most earning the minimum are below the age of 30 and work for restaurants or in retail. For 19 of 20 workers the minimum wage is irrelevant.
The unions love to cite statistics on the growing number of Americans earning the minimum wage. Let’s take them for their word on that. Isn’t the fact that wages in America are so low for so many prima facie evidence that Obamanomics is an utter failure. Democrats do speak up for higher wages, but their policies lower them.
Which is why Americans are so cranky rightly now. The median, or middle class wage isn’t rising. Since the end of 2008 through the middle of 2015 government statistics show real weekly median earnings flat. That’s the scandal. See chart.
Republicans should be educating voters about how to push those wages up. One way is better skills for sure. Kudos to Sen. Marco Rubio who gave us some straight talk and said America needs more welders and fewer philosophers. And, as he correctly put it, “welders are paid more than philosophers.” When are our so-called institutions of higher learning that are supposed to be training the millenials for the new economy going to get that?
We also need businesses to invest more. More plants, more equipment and machinery, and computers and IT are needed. Why aren’t the businesses investing like they used to? Maybe it’s because Mr. Obama raised the tax on business investment by 60 percent. When you raise the capital gains tax on investment, investment goes down, workers have less equipment to work with, they become less productive, and they get paid less. As Jack Kemp used to put it, if you’re trained to operate a lathe, you’re not going to get hired if the businesses don’t have lathes — unless you bring you’re own.
Mandated benefits like Obamacare health insurance requirements lower wages too. Maybe I missed it, but not a single Republican trashed Mr. Obama for scuttling the Keystone pipeline. Those jobs pay $25 to $50 an hour. But apparently, Democrats don’t want those.
By the way, back in 2007 the Democrats in Congress raised the minimum wage in three steps. Poverty hasn’t fallen. Teen unemployment skyrocketed even more than the national unemployment rate during the recession, and most importantly the middle-income wage flattened. It didn’t work.
Conversely, Ronald Reagan never raised the minimum wage once. But in the 1980s expansion, the economy grew by 4 percent and worker compensation rose steadily. Mr. Reagan may have only been an economist from Eureka College, but he had an instinctive understanding of how the economy works.
Thankfully, Marco Rubio did get the minimum wage question right. “Here’s the real way to raise wages,” he explained. “Make America the best country to expand a business, or start a business.” Free markets are proworker. Socialism is anti-worker. Stephen Moore is an economic contributor to Freedom Works and a Fox News contributor.