Bob Evans & Jimmy Dean; You Have Competition

What’s ahead from Congress?  Here’s a prediction.  Not much.  Mostly smoke and mirrors, with some demagoguery thrown in for good measure.

The shopping list, as announced so far is mostly bluster.  Jamming through a batch of poorly thought out and poorly worded statutes makes for good TV and sound bites, but not for good law.  In many ways it’s the antithesis of governing and leadership.  An opportunity squandered.  We certainly needed the 1994 election shift of power, but the Republicans took their eye off the ball and paid the price in 2006.  In payback, they will get ramrodded for a while…they just never seem to learn.  Oh, well.  So let’s look at the first sausage out of the grinder, the House version of a minimum wage increase.

I’ve worked under the minimum wage, managed employees who were paid minimum and well above, and helped formulate compensation decisions in response to periodic increases.  Minimum wage increases are counter-productive; no employer ever hires more folks because their costs just went up!  They cause the loss of some unspecified number of jobs every time an increase occurs; that is a fact.  The jobs lost are never those of the advocates of the increase.  Folks at the bottom of the totem pole are the ones who either lose the job, suffer a reduction in hours earned or learn a job they might have been hired for is not created.

This particular increase amounts to a 41% increase over its rollout period.  Thank goodness, very few jobs are actually paid the minimum, or else the ripple effect of a 41% increase through the economy would be more pronounced.  Most jobs (96%, according to USA Today’s reporting on the Bureau of Labor Studies) currently earn above the Federal minimum either because market forces have set a higher wage, or there is a state minimum wage above the current Federal rate.  Twenty-nine states and DC have higher minimums; 70% of the population resides in those areas.  So in a great many respects this has just been a photo-op that folks from both parties and the AFL-CIO could rally around.

I don’t mean to be viewed as dismissive of those few folks who are actually trying to live on a full-time or part-time job at whatever their prevailing local minimum wage is, or to try to raise a family.  It’s tough to make ends meet under those circumstances, even before trying to consider a few amenities.  But the pathway to greater financial freedom does not rest with contenting oneself with the minimum wage.  Jobs everywhere are available at rates above the minimum.  We currently have, in most areas, a seller’s market for workers’ skills.

Most minimum wage earners are not trying to fully support themselves; typically they are new to the workforce and living at home or school and working less than full-time.  Ask a teen-ager to empty their pockets and out will fall cell phones, I-Pods, MP3 players and a variety of other luxuries…there are the real fruits of the minimum wage…discretionary income!