FLASHREPORT

MINIMUM WAGE HIKE PROPOSAL AN ATTACK ON POOR AND SMALL BUSINESS

This column was written by Republican State Senator Bob Dutton.

When Governorr Schwarzenegger recently announced that he intended to support a $1 increase in the state’s minimum wage – from its currently $6.75 per hour level to $7.75 over the next year – he invoked the name of Nobel Prize wining economist Milton Friedman as an inspiration to propose the increase.

Here’s exactly what Milton Friedman said about minimum wage laws:

“The high rate of unemployment among teenagers, especially black teenagers, is both a scandal and a serious source of social unrest. Yet it is largely a result of minimum wage laws. We regard the minimum wage law as one of the most, if not the most, anti-black black laws on the statute books.”

Mr. Friedman is absolutely right – increasing the minimum wage is nothing more than a regressive tax against the poor and an assault on small businesses in the State of California.

I’m troubled because I get the sense that the minimum wage may be increased this year without much of a fight. There is early indication that there won’t be a heavy lobby against the increase that is being touted by the governor, his staff and other Democrats as the “compassionate” thing to do.

Nothing, however, about increasing the minimum wage is compassionate for those it is intended to help – the poor. In fact, study after study has shown that increasing the minimum wage will do nothing but harm those who the raise is intended to help. At the same time it levies higher costs on small business – the kind of business not generally represented by the California Chamber of Commerce – forcing them to either cut back on staff or employee hours, or pass the cost on to the consumer.

Last year the University of Wisconsin released a study that showed welfare mothers in states that raised the minimum wage remained on public assistance 44 percent longer than those in states where the minimum wage was not raised.

Fifty years ago the minimum wage was increased from 75 cents to $1 an hour, which resulted in teenage unemployment spiraling from 14 to 24 percent. Ten years ago when the federal minimum wage increased to $5.15 an hour the unemployment rate jumped from 37 to 41 percent immediately.

In addition to minimum wage being an assault on the poor and minorities, it’s also an assault on small business – those who can least afford a mandated tax increase. The California State Chamber of Commerce may not have the ear of small business – I’m talking about those businesses with 25 or fewer employees - but I have certainly had plenty of opportunities over the last several years to speak to many of them and they have all made it clear to me that we as a legislature need to hold the line on any types of increases to small business – including increases in the minimum wage.

I might also point out that those who take minimum wage jobs are generally just entering the workforce and these jobs were never intended to be mortgage supporting jobs. I’m convinced that raising the minimum wage does nothing more than expand the underground economy and force business to turn to more technology, using less labor. Those small businesses that can’t turn to technology and have small profit margins will be forced to cut employee positions or hours or raise the cost of their products – or both!

I’m calling on all small businesses to make their voices heard as the debate over increasing the minimum wage moves forward over the next several weeks and months. I will not support such an increase but I will need your help and your voices if there is any hope of stopping this regressive tax.

For those of you who think you are being compassionate and think the raise in the state’s minimum wage is necessary, history has shown that the very people you think you are helping are actually being hurt.