Saturday, February 16, 2013

Minimum Wage Hurts Those It's Supposedly Intended to Help ... Read on for an Example of WHY POLITICS SUCKS

Minimum wage legislation is on the table after President Obama's State of the Union Address this past week.

It's also nothing more than a sop to the Democratic Party's labor union allies and morally indefensible, since the evidence is overwhelming that raising the minimum wage actually harms those it's intended to help. So why don't members of Congress, and especially Republicans, fight hard to keep it from being enacted? Because the practical politics in America say don't fight it, that's why.

And that's why bad legislation gets passed. Because often it's easier to to along to get along in Washington, and what happens as a result on the broader public welfare isn't even a consideration.

And that, my friends, is why politics sucks.

The Minority Youth Unemployment Act is subtitled 'A higher minimum wage will hurt Obama's most loyal supporters:'

"One paradox of the Obama Presidency is how it has retained the support of young people and minorities despite the damage its policies have done to their economic prospects. In his latest attempt to increase the minority youth jobless rate, President Obama is proposing to raise the minimum wage.

In his State of the Union address, Mr. Obama proposed an increase to $9 an hour by 2015 from $7.25, and then indexing the minimum to inflation. "Employers may get a more stable workforce due to reduced turnover and increased productivity," the White House says. No doubt employers are slamming their foreheads wondering why they didn't think of that. . . .


In the real world, setting a floor under the price of labor creates winners and losers. Some workers will get a $1.75 raise. Great. But others—typically the least educated and skilled—will be priced out of the job market and their pay won't rise to $9. It will be zero. . . .

The minimum wage is also an ineffective way to reduce poverty. Most families in poverty don't have someone who works, so making it more difficult to get a job exacerbates poverty. Mr. Obama says that a "family with two kids that earns the minimum wage still lives below the poverty level. That is wrong."

He left out that most minimum-wage earners are not the primary bread winner. Nearly 40% live with a parent or relative. The average family income of a household with a minimum-wage worker is about $47,023—which is far above the poverty line of $23,550 for a family of four.

Mr. Obama didn't even tell the whole story about parents raising a family on a minimum-wage income. A full-time minimum-wage worker earns roughly $15,000 a year. But that worker also receives a cash supplement from the earned income tax credit of roughly $5,000, and many states provide benefits on top of that to reward working. That doesn't count government benefits like food stamps, Medicaid, child care and more. According to data from the Employment Policies Institute, about two of every three minimum-wage workers also get a raise within one year. . . .

The last increase hit in July 2009 just after the recession ended, and as the nearby chart shows, the jobless rate jumped for teens and black teens especially. For black teens, the rate has remained close to 40% and was still 37.8% in January. . . .

William Dunkelberg, chief economist for the National Federation of Independent Business, says that after the July 2009 increase 600,000 teen jobs disappeared in the next six months even as GDP expanded. In the previous six months, when the economy was still shrinking, half as many teen jobs were lost. The overall teen jobless rate was still 23.4% last month, which means demand for unskilled workers is low even at $7.25 an hour. Demand will be lower at $9.

Mr. Obama's economists know all this, but then the minimum wage has nothing to do with poverty or unemployment. It's a political play to reward unions and box in Republicans. The minimum wage polls well because Americans naturally want everyone to make more money, and the damage in foregone jobs isn't obvious.

It'd be nice to think that some Republicans, even one, would make the moral case that the minimum wage hurts the poorest workers. But both Presidents Bush, 41 and 43, went along with increases and so did the Newt Gingrich Congress in 1996. Mr. Obama knows that history. Republicans may fold again to take the issue off the table in 2014, but it's a tragedy that those who will suffer the most are Mr. Obama's most ardent supporters."

Summing Up

Yes, politics sucks and winning elections and rewarding allies are all that matter.

Thus, it's all about doing the momentarily popular thing instead of doing the right and responsible thing. Winning votes by duping voters and helping cronies, in other words.

Is honestly in politics really too much to ask?

The answer, unfortunately, as is made very clear from the President's latest proposal on hiking the minimum wage yet again, sadly is yes.

Thanks. Bob.

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