What do you get when you combine a down economy with masses of discouraged, underemployed and downtrodden workers? A silly season of targeted protests against businesses and outrageous demands for government intervention. Both are products of the call from the White House for a higher minimum wage.
Demonstrators who work for mega-restaurant chains such as McDonald’s and KFC are protesting or have walked off the job in New York, Chicago, St. Louis, Milwaukee, Flint and Kansas City. Among their demands is a base wage of $15 an hour.
This “income inequality” mania extends to Washington, D.C., a city that wants non-unionized retailers grossing $1 billion annually to pay their workers $12.50 an hour. The implication is that the labor market has failed to provide a “living wage” to those who work full-time.
This labor-inspired, socialist leaning babble piggybacks President Barack Obama’s recommendation that Congress hike the federal minimum wage to $9 an hour from $7.25 by the end of 2015 then automatically adjust it to inflation. Fortunately Obama’s call fell on deaf ears – at least inside the Beltway. But his ground troops have taken the fight across America to press city leaders to send employers an ultimatum: pay up or shut down. And the Motor city isn’t immune to the protests or the hysteria to end “wage disparities.”
Some years back, the late Detroit City Council President Maryann Mahaffey backed a measure requiring city contractors to pay their workers a “prevailing wage.” It was designed to bring Detroit in line with a Depression-era wage law.
In 1990, the council approved a partnership proposal to the 1935 Davis-Bacon Act, which guarantees workers on federal construction projects a minimum wage based on locally prevailing rates. Some additional costs would have been tacked on to each new city contract, forcing an employer to pay higher wages and/or benefits and taking some businesses out of competition for city work.
Mahaffey claimed her ordinance would “level the playing field” by guaranteeing workers on city-funded projects of more than $100,000 the salary rate set by the federal government. The question of how much of an incentive the ordinance would have been to workers, or how much of a disincentive it would have been to the city was never answered. In a rare pro-business showing, then-Mayor Coleman Young vetoed the measure and, thankfully, the council couldn’t muster enough votes to override.
Today, there is no retreat from the obsessive belief that if the estimated 15 million low-wage workers were paid a “living wage,” it would be a boost to the sagging economy Obama must now own. Nothing, however, could be more devastating to the working poor or businesses, particularly the fast food industry.
First, the minimum wage was never intended to be the vehicle for people to raise entire families or to enter the middle class. It was meant to supplement household incomes – college students, housewives, and part-time or entry-level workers. So unrealistic expectations about pay and working conditions may explain why many of the underemployed are demonstrating rather than moving up the economic ladder.
With higher wages come higher employer expectations of performance. People with the least education and talent become less desirable and ultimately priced out of the job market.
Another impediment to the working poor not advancing is their refusal to accept low-pay jobs. Jobs that pay less than traditional manufacturing jobs –no longer a realistic income standard – are dismissed as marginal, if not menial.
Neither this nation, nor American cities for that matter, needs another hindrance to erode the competitive position of businesses. The working poor would be better served if governments at all levels accommodate job creators by eliminating impediments to real wage growth: unnecessary regulations, onerous zoning and licensing requirements and high taxes. Nothing smothers the entrepreneurial spirit, shackles the economy and impedes growth than these barriers to job opportunities.