D.C. Mayor to Sign Outrageous Minimum Wage Scheme into Law?

September 7, 2013

This could be the week when Washington, D.C. Mayor Vincent Gray signs into law a minimum wage measure passed by the D.C. city council two months ago.  The Large Retailer Accountability Act would require stores that are larger than 75,000 square feet and whose parent companies have yearly revenues of $1 billion.to pay its workers 50 percent more than the current local minimum wage of $8.25 per hour.  Proponents of the new law cite the need for Wal-Mart and other employers to pay a “living wage”.  Detractors of the measure, including the liberal Washington Post, correctly claim it will give the nation’s capital an anti-business reputation which will continue to hinder job growth in the District.

Naturally, the Post’s analysis is spot on as Wal-Mart has threatened to scrap plans to build up to six stores in the D.C. area.  Altogether, 1800 jobs would be lost including at two locations in impoverished neighborhoods.

Nevertheless, backers of the measure are stubbornly sticking to their dogma even as Wal-Mart warns it will pull the plug on 1800 jobs if the measure becomes law.

Last week, Councilman Vincent Orange, in a statement reflecting serious economic imbecility, stated, “We’re glad (Wal-Mart) finally recognized the value of the District of Columbia, but we also recognize the value of our residents, and the value of one hour of our residents’ time is greater than $8.25″.

Wow, what does that mean?  Is Orange claiming that he and other council members are smart enough to determine the worth of every single worker in the nation’s capital?  Wasn’t this same hubris found to be fallacious in the collapsed Soviet Union?

It is bad enough that there is any minimum wage in D.C. let alone an attempt to produce a double tiered system.  Minimum wage laws are, as the late great Murray Rothbard put it, “compulsory unemployment”.  Rothbard explained it well:  “The law says it is illegal, and therefore criminal, for anyone to hire anyone else below the level of X dollars an hour. This means, plainly and simply, that a large number of free and voluntary wage contracts are now outlawed and hence that there will be a large amount of unemployment. Remember that the minimum wage law provides no jobs; it only outlaws them; and outlawed jobs are the inevitable result.”

But, besides Rothbard’s cogent argument against minimum wage laws, the two tier system developed in D.C.is un-American.  How can there be two different sets of rules for different players in the marketplace?  Would there not be outrage if the government provided bailouts to two car manufacturers while the third which managed its business responsibly was not rewarded with federal largess?  Perhaps that’s not the best example, but again, even the leftist Washington Post understands that the law will create an “uneven playing field” for Wal-Mart and other big box retailers.

At the end of the day, one must question the motives of the Washington D.C. city council which passed the measure.  This particular city council has had three of its members convicted, one plead guilty, and another under investigation for bribery and corruption.  The law targets large, non-unionized retailers.  Was its passage a payback for union donations?  Unfortunately, for workers in D.C., whether it was or not, if the mayor signs it into law they will be out 1800 jobs.


Economic Illiterates Pounce on Wal-Mart Again

June 9, 2013

The Wal-Mart haters are at it again.  The token lefty at Forbes.com, Rick Ungar, has a piece on that site accusing the nation’s largest private employer of amassing huge profits at the expense of American taxpayers.  Citing a report issued by the Wisconsin Medicaid program, Ungar claims that for every 300 employee Wal-Mart Supercenter store in Wisconsin alone the company’s “sub-poverty” level wages costs American taxpayers about $904,000 per year.  The total is the result of government subsidized health care and housing, and food stamp payments needed to keep families afloat financially.

It’s the same tired old story with a new twist – not only does Wal-Mart harm its workers, but it is a financial burden to taxpayers as well.  What’s even more alarming is that California and other states are considering fining employers like Wal-Mart up to $6000 for every employee of theirs that ends up on state subsidized health care plans.

In the first place and at the foundation of the issue is the fact that no one is forced to work for Wal-Mart and accept the company’s so-called “sub-poverty” wage.  The last time I checked the 13th Amendment to the Constitution banned slavery and involuntary servitude.  If workers don’t like the wages they receive or can’t make ends meet working at Wal-Mart, they can look for work with another employer.

But many do not and thus we have the crux of the problem.  Retail jobs require few if any advanced skills and they certainly do not require a college degree.  Thus, they don’t pay very well.  Traditionally, they have been ideal starting positions for young folks to give them work experience and gas money.  I remember applying for my first job with a family pharmacy when I was 16.  The toughest question I encountered during the interview was, what is the final price of an $.89 box of cough drops if the sale price for the day is 10 percent off?  And today, retail clerks have it even easier as all they have to do is pass the item over a scanner to get the final price.  The bottom line is that retail positions are not made for folks who are supporting families or have adult commitments.  Customarily, folks with these responsibilities have turned to manufacturing and professional jobs.

However, the great irony is that the myriad federal and state regulations which were meant to benefit workers have actually hurt them more by chasing jobs overseas to lower cost venues.  Since 1979, when manufacturing jobs in America peaked at 19.5 million, we have lost close to half of them to overseas competition.  Currently, about 11.5 million Americans work in manufacturing jobs which is the lowest amount since 1941. Now, with far fewer manufacturing jobs for workers to turn to, the same folks who gave us this condition are demanding that retailers raise their wages so workers can meet their financial responsibilities.  But, it doesn’t work that way.  In our economic system, Wal-Mart pays wages based on what the market will bear.  Instituting a higher minimum wage or mandating that retail companies provide health care coverage for their employees will cause more unemployment and hurt the very people those directives were meant to help.  We are already seeing Wal-Mart and other companies gearing up for Obamacare by cutting employee hours to circumvent the law.

In the final analysis, hasn’t government intervention in our economy done enough harm already?  Besides obliterating our industrial base through enormously costly regulations, the Federal Reserve has destroyed the purchasing power of the dollar by monetizing huge sums of federal debt and expanding the money supply ad infinitum .  The very commodities that the working class spends so much of their disposable income on – health care, housing, and food are the very things that have increased in price the most.  More federal and state mandates will only make the matter worse.  We need a return to free markets and sound money.  Folks literate in economic theory understand this.

Kenn Jacobine teaches internationally and maintains a summer residence in North Carolina

The Right to a Job Doesn’t Exist

November 20, 2012

The idea of the United States of America was born during the Age of Enlightenment (17th and 18th centuries).  The great philosophers of that time challenged the divine right of kings by enunciating a new theory for the social order.  Their theory was articulated by the English philosopher John Locke (1632-1704), who claimed that man originally was born in a state of nature where he had the absolute rights of life, liberty, and property.  Thus, when Thomas Jefferson presented the Continental Congress with the document that would lay the foundation for our government and society, the Declaration of Independence, he included one of the most eloquent and oft quoted statements in the English language:

“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty, and the pursuit of Happiness”

In essence, this one profound statement gives all Americans rights that cannot be taken away by any legal authority.  The greatest of these rights is the right to property, which includes an individual’s body as well as possessions he/she has toiled to produce.

So, where is this treatise headed you might ask?

This Friday is Black Friday in the United States and to protest the labor practices of mega-retailer Wal-Mart, some of its employees are planning nationwide walkouts.  On the busiest shopping day of the year in the U.S. supposedly 1000 picket lines are expected at Wal-Mart stores across the country.  Specifically, the activism is meant to draw attention to what strike organizers call Wal-Mart’s “retaliation against employees who speak out for better pay, fair schedules and affordable health care”.

Now, there is no question that Wal-Mart employees are entitled to freedom of speech, guaranteed by the Bill of Rights, just like all other Americans.  And they have enjoyed that right by virtue of the fact that none have been imprisoned or worse for speaking out against their employer.  But, this action by disgruntled Wal-Mart employees has really nothing to do with freedom of speech; it has everything to do with property rights.

In the employer-employee relationship, the employer has property rights to the business which includes, the buildings, inventory, and all other aspects of the enterprise (i.e. good will) not seeded to another entity.  This also includes the paid positions made available to the public by the company.  In this same relationship, the worker has property rights to his/her labor.

This arrangement is consistent with the right to property proclaimed in the Declaration of Independence.  A right which includes an individual’s body as well as possessions he has toiled to produce (in this case the business enterprise) and is the reason why the hiring process includes the worker filling out an application, meeting to be interviewed, and negotiating an employment contract.  Consequently, the right to one’s labor is an indispensable property of the individual.  But the job that he sells his labor to perform is the property of the business.  Thus, the right to a job doesn’t exist because that would be a violation of the property rights of business owners.

Now, I realize there are such things as anti-discrimination laws, collective bargaining laws, and other acts of government which grant workers the right to employment and job security.  But, they violate the unalienable right to property guaranteed first in the Declaration of Independence and then in the U.S. Constitution.  They are also egregious representations of how far we have strayed as a nation from our original ideals of liberty.

If Wal-Mart employees are unhappy with their working conditions, they have a right to petition their employer within the confines of their labor contract.  If their grievances are not met, the choice before them is to either continue to honor their labor contract or resign.  The founding principle which gave birth to American liberty requires this.