Trump is wrong, wages are not too high

Repub­li­can front-run­ners flubbed the ques­tion about min­i­mum wage

The Washington Times Weekly - - Commentary - By Stephen Moore

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.

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