Wednesday, 27 June 2007
Day of Sadness
« Judge Who Oversaw Fletcher Case Backing Beshear | Main | Clouds are Gathering in Frankfort »Well, yesterday the state minimum wage began its ascent to $7.25 an hour. In the process we began our trek down the road of economic stupidity. But hey, it is for a good cause.
The Raise the Wage Coalition lobbied for the pay hike, saying the working poor can't afford basic necessities like housing, food and clothing.
"In one sense it's not a lot of money," said Ed Monahan, chairman of the coalition. "But in another sense, if you're a single mother struggling to make ends meet, that little bit of money is going to help you."
See I told you it is a good cause! I wish I could feel good about it like Ed. Unfortunately, I utilize my brain and think about the costs associated with the wage hike. The money has to come from somewhere and it is the small companies that pay the price.
Thomas, who jump-started his sawmill business three years ago in the poorest county in Kentucky, is preparing his wallet.
"It may be harder to pay that," said Thomas, who starts out trainees at $5.15 for stacking lumber and pushing slabs through giant saws.
...
Jones said the wage increase may help thousands of the working poor, but it could cost many their hours or even their jobs.
"As minimum wage goes up, you would expect employers to hire fewer workers," Jones said. "Instead of hiring three-to-four low skilled workers, you could hire two higher skilled workers."
The biggest cost comes in the form of lost jobs. Because Job loss is what happens when you tax employers of unskilled workers in an attempt to subsidize unskilled workers.
By the time minimum wage reaches $7.25 in Kentucky, there will be a job loss of up to 6.4 percent, according to Ken Troske, director of the UK Center for Business and Economic Research.
This effect will be heaviest in rural Kentucky where more people work for lower paying jobs. A better idea, if we had truly wanted to help the poor, would be to provide tax credits. That way the cost of the subsidy is spread across the entire tax base. Instead, the minimum wage law targets companies that hire low skill workers to shoulder the entire burden. A burden that many may not be able to carry without cutting jobs.
By destroying jobs, the new law will actually hurt those it purports to help. Condemning them to even less opportunity and even greater poverty. Don't you feel better about yourself now? I know I don't feel good about it.
thought you should read this.
http://www.amazon.com/gp/product/1402208413/ref=reg_hu-wl_item-added/103-5307804-4063050