Government Should Not Set Wages

Hope must spring eternal! Despite the universal failures of socialist regimes, lefties continue to mouth the siren song of economic salvation by the government.
Albuquerque City Councilor Martin Heinrich has joined the choir. He wants Albuquerque to follow in the ruinous footsteps of Santa Fe with an elevated minimum wage law. Heinrich is pretty much a piker, though. His Fair Wage proposal would set the minimum at “only” $7.15 per hour, while Santa Fe’s so-called “living wage” is already $8.50 and slated to grow to $10.50.
This being such a terrific idea, why not $50?
You have to give the left an “A” for spin. “Living wage” is as warm and fuzzy as motherhood and apple pie.
Then follow with an “F” for economics.
With each passing day, communities in the United States find themselves in greater competition with each other, and with other countries’ economies. One doesn’t need Econ. 101 to understand that a rational employer will do whatever it must to avoid paying more than a particular job contributes to whatever the employer is selling in a competitive market. This cost avoidance can include automation, out-sourcing, moving to a less anti-competitive location and myriad other strategies.
When a community like Santa Fe – well known for elitism from the get-go – adopts a super minimum wage, it telegraphs to everyone its decision that lower-paying jobs are simply unwelcome. That leaves nearly unemployable the young, who are eager for career starts, and others who are simply unskilled.
Sure, a hotel, restaurant or retailer wanting to sell in the Santa Fe market has to bite the bullet and pay, but the result must be higher prices with the risk of driving customers away.
Or the result could be driving customers ever more into labor-efficient operations like Wal-Mart. More on that below.
Some considerations go beyond labor cost. One employer recently moved his business from Santa Fe to Pueblo, Colorado. When asked if the “living wage” law were the cause, he replied, “Not directly … but I don’t want someone coming in and telling me how to run my business.” I know from personal experience in Santa Fe that his wasn’t the first to leave for exactly the same reason, and no one will ever know how many businesses refused to consider Santa Fe on this account.
One morning last October, I debated “living wage” with former Albuquerque District Court Judge Anne Kass. Supporting her anti-capitalistic view of the world – in debate and a subsequent column – Kass went all the way back to slavery, then fast-forwarded to an unnamed family in Arkansas that “has amassed a shocking fortune … the old-fashioned, American way – by exploiting workers …”
That would be the family of Sam Walton, who invented Wal-Mart. Kass’ spin appeals to the typical knee-jerk liberal, but in fact she ineptly picked a stunningly inapt example to support her case.
For one thing, Wal-Mart employees already do exceptionally well when compared with others employed in retailing.
For another, Wal-Mart’s sales per employee are astronomical. It can pretty easily swallow any increase that might result from a “living wage” law, and happily collect customers driven to it by price hikes other retailers must enact to cover government-mandated labor costs.
Lastly, I can think of no business that should be less a target of the left than Wal-Mart. Name a single business anywhere that has made it possible for more people of limited means to live better than has this product of Sam Walton’s genius. Of course his family is wealthy: that’s a highly prized result of business success in free-market economies.
Heinrich’s upbeat statements to the press notwithstanding, a case simply cannot be made that Santa Fe’s “living wage” law has been good for its economy. Now he’s backing off, saying only that “the sky has not fallen.”
Well, a bit of patience on that is warranted. No one claimed the sky would fall in the ten months the law has been in effect. Further, anyone acquainted with Santa Fe’s economy for at least 50 years knows it is not a reasonable test bed for Albuquerque or any other New Mexico community.
An economy remaining at the U.S. bottom has no need of more bleeding-heart meddling.