Minimum Wage Proposal Is Popular ... It's Also Harmful

President Obama has proposed an increase in the minimum wage from $7.25 to $9. The 'progressive' President's recommendation is popular with both the public and labor unions as well.

With the public, the proposal is popular probably because everybody could use a little more money these days. Besides, who's it going to hurt?

And big labor likes the idea because a minimum wage hike is always good for big labor. What's that, you ask? Aren't union workers paid considerably more than the minimum wage?  Well, yes, but ......

Why Unions Want a Higher Minimum Wage provides the background as to why unions are so supportive of the president's proposal to increase the minimum wage:

"Organized labor's instantaneous support for President Obama's recent proposal to hike the minimum wage doesn't make much sense at first glance. The average private-sector union member—at least one who still has a job—earns $22 an hour according to the Bureau of Labor Statistics. That's a far cry from the current $7.25 per hour federal minimum wage, or the $9 per hour the president has proposed. Altruistic solidarity with lower-paid workers isn't the reason for organized labor's cheerleading, either.

The real reason is that some unions and their members directly benefit from minimum wage increases—even when nary a union member actually makes the minimum wage. . . .

The data indicate that a number of unions in the service, retail and hospitality industries peg their base-line wages to the minimum wage.

. . . the United Food and Commercial Workers International Union says that pegging its wages to the federal minimum is commonplace. On its website, the UFCW notes that "oftentimes, union contracts are triggered to implement wage hikes in the case of minimum wage increases." Such increases, the UFCW says, are "one of the many advantages of being a union member." The labor contracts that we examined used a variety of methods to trigger the increases. The two most popular formulas were setting baseline union wages as a percentage above the state or federal minimum wage or mandating a flat wage premium above the minimum wage.

Other union contracts stipulate that, following a minimum-wage increase, the union and the employer reopen wage talks. . . .

Minimum-wage hikes are beneficial to unions in other ways. The increases restrict the ability of businesses to hire low-skill workers who might gladly work for lower wages in order to gain experience. Union members thus face less competition from workers who might threaten union jobs.

This view is not speculation. A 2004 study . . . determined that lower-wage union workers typically see a boost in employment and earned income following a mandated wage hike. Never mind the corresponding drop in jobs and earned income for nonunion minimum-wage workers. They may have been priced out of the jobs they need, but that is not the union's concern—its members have landed higher wages and reduced competition for jobs.

Such considerations are worth keeping in mind when contemplating the president's wage proposal .... Labor unions spent an estimated $174 million on the 2012 election, with 91% of the money going to Democrats, according to the Center for Responsive Politics. Now many union members could see their paychecks grow as the result of a Democrat-backed mandate—even though the overwhelming majority of scholarly evidence says that these wage increases have a negative effect on employment."

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And how do we know the minimum wage proposal is popular with the public? Because of a recent poll, that's how.

Poll: Americans Divided on Spending Cuts says this about the minimum wage proposal:

"Mr. Obama has strong public support for several of his top policy priorities. Some 58% favor raising the hourly minimum wage to $9 per hour, from $7.25 today.
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Summing Up

So there you have it.  President Obama has both the unions and the public in agreement that the minimum wage should be raised from $7.25 to $9. It's only fair, to hear them tell the story? But fair to whom?

No poll was taken on how many Americans are willing to pay a lot more for a trip to McDonald's, assuming fast food workers' employment isn't negatively impacted as a result of a minimum wage hike, even though it will be.

And for that matter, nobody asked taxpayers how they'd like the idea of paying increased taxes for government's costs associated with higher unemployment as a result of any such minimum wage increase.

So lest we forget, raising the minimum wage will only harm those it's intended to help by keeping more of our young people unemployed. And youth unemployment is already at a disgracefully high level.

But all that's irrelevant when U.S. politics and the Democratic Party's alliance with labor unions are involved.

Unfortunately, that's what Washington is all about --- politics.

And even more unfortunately, We the People frequently don't take time to think things through that at first blush may sound like a good idea.

President Obama 'gets' that. Unions 'get' that, too.

We the People need to 'get' it as well, if only out of self defense.

Thanks. Bob.