Advocate says raise minimum wage till it hurts

By David Flemming

On Sept. 6, David Cooper of the Economic Policy Institute, a left-leaning Washington-based think tank founded by a coalition of eight labor unions, testified before the Minimum Wage Committee. He said:

“We know the past minimum wage agreements have had no negative effect, or if there is a negative effect, it’s so small that it’s negligible. Now if you can raise the minimum wage at those past levels and have no negative consequences, you’re really not raising it high enough. You should be pushing; you should be trying larger increases. Because until it shows a substantial negative effect, you’re never going to know how high you can actually raise the minimum wage.”

Think about that for a moment. This guy is actually advocating for adopting a policy that will have “a substantial negative effect” on Vermont workers and their employers just to find out where that line of unendurable damage may be. In other words, let’s crank up the pain levels to see at what point the guinea pig passes out.

Back in 2015, the Federal Reserve Bank of San Francisco published a study showing state minimum wage laws “directly reduced the number of jobs nationally by about 100,000 to 200,000” between 2007 and 2014. If 200,000 jobs is “negligible,” it’s scary to imagine what Cooper might consider “substantial.”

Cooper seems to view the Vermont economy as one giant machine, with Vermont legislators as the operators who should go full steam ahead into uncharted waters, because they can always let off on the throttle and undo legislation if need be. But Vermont workers are not cogs in a machine. If Vermonters lose their jobs as a result of minimum wage increases, it would take months for Vermont legislators to gather the data they need to recognize the problem and draft legislation to address the issue, and even longer for employers to hire back lost workers — assuming the employers are still in business and the workers haven’t moved to another state where it is legal to sell their work for what it is worth.

Minimum wage laws do not come equipped with an immediate feedback system that will switch off when the economy reaches some level of “critical unemployment.” Even if Vermont decides to reverse course after they pass minimum wage legislation, we will still have to deal with a unhealthy labor market for years to come. This is why it is so important that Vermonters say no to a $15 minimum wage while we have the chance.

David Flemming is a policy analyst for the Ethan Allen Institute. Reprinted with permission from the Ethan Allen Institute Blog.

Image courtesy of Wikimedia Commons/Public domain

10 thoughts on “Advocate says raise minimum wage till it hurts

  1. I like being in a union but we put the squeeze on the goose that layed the golden eggs back in 2000. By 2003 the layoffs had gotten to me. I was out for 4 1/2 years. If work groups want to do this to themselves…fine. But we don’t need our legislators stupidly jumping in. The other thing to remember is… if you want to make more money….learn skills that will earn you more money. Otherwise where is the incentive to move forward. Kind of like a social program. DEincentivises people to work hard to better themselves.

  2. Wonder where these well designed and obviously costly signs the demonstrators are carrying came from, and are the demonstrators Vermonters? Or are they union paid out-of-staters?

  3. Uncle!

    Census Bureau: Vermont Only State to See Poverty Rate Rise in 2016

    “New data released Thursday by the U.S. Census Bureau indicate that 71,329 Vermonters lived below the federal poverty line in 2016 — roughly 10,000 more than in 2015. Vermont was the only state to see a statistically significant increase in its poverty rate, from 10.2 percent in 2015 to 11.9 percent in 2016.”

    • At the risk of repeating myself: Why is the poverty level an important consideration in the minimum wage debate?

      Only 2.7% of the U.S. workforce earns the $7.25/hr. minimum wage or less.

      In Vermont, this percentage appears to be only 2% (7000+- out of 344,000 workers).

      So what happens when 2% of the workforce receive an arbitrary wage increase? Answer: the other 98% demand a commensurate raise in pay. It’s called labor market equilibrium.

      When 2% of the workforce receive a 50% wage increase ($10/hr. to $15/hr. for example) and the other 98% receive even a fraction of that percentage increase, the total wages for all 344 thousand Vermonter workers increases exponentially more than the total dollars added to the economy by raising the minimum wage. And prices across the board increase accordingly.

      Vermont economist, Tom Kavet, testified that “positive effects would be “largely offset” by higher prices for some goods and services, higher federal income and payroll taxes, reductions in federal benefit and support payments, reductions in private employee benefits, and businesses cutting jobs and hours.”

      Case in point:
      Between 1979 and 2016 the federal minimum wage increased 150%. Simultaneously, the federal poverty level (the amount of earned income designated as being less than a livable wage) for individuals increased 231%. In other words, while minimum wage earners received more pay, the purchasing power of those extra dollars decreased 81%.

      Again, if anyone doesn’t believe labor markets react this way, just look at the striking teachers in Burlington as they compare their wages to the wages of others in order to justify their demand for salary increases.

  4. Get ready for the $10 hamburger from what was previously the $1 menu. One problem is the employees production does not keep up or increase with the $15 per hour rate. When I came out of the Army in 1969, I was paid minimum wage of $2.22 per hour. Because I worked in a union business I only got pay raises at set intervals even though the office manager said I was one of the best and most accurate operators they had.
    Needless to say, I started looking for another job after a year in that union hell hole.

  5. Is there a single, trained economist anywhere in Vermont government? Go ahead, raise the minimum wage to $15, destroy more small businesses and the jobs that go with them. Make more Vermonters dependent on welfare which is precisely what the Leftists want . . . a permanent welfare class beholding to government. Go ahead and jack-up the rate; the only difference between Vermont and a Banana Republic will be that we can’t grow bananas!

  6. Sure, the unions want the minimum wage raised. Even though they don’t represent or suck dues from the vast majority of those people. If the “base wage” is raised, they can then go on to say “Well, the MINIMUM wage is now $X/hr, so our members now DESERVE this much more.

  7. A better approach may be to just raise it to $100 per hour. That way, we’d have instant feedback and after a year in govt, could be dropped to $95 per hour. Any companies left in the state would be pleased and could offer the one remaining employee the $95 rate and give him 1 hour a week work. What could possibly go wrong?
    The second week would have an empty business building for sale with no takers. That would clear so much land for wind generators to produce all the power that we need. I think one of those propellers formerly used on hats as a joke should be enouph for an empty state.
    See?? A win win proposition.

  8. As it is NOW – the only people working minimum wage are teenagers. Raise the minimum wage and teenagers will never find work, as college grads will be happy to work for $15/hr. The only upside is that employers wont benefit from all the illegal alien hires they have now because they will have to pay them the same as everybody else. Then again, the illegals will still probably work harder than most lazy Americans

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