The State Industrial Welfare Commission has the authority, apparently, to hike the state’s wage mandates on private employers, without any action of the State Legislature. That seems like a poor set-up. Mandates on employers like this should require a vote of the people’s representatives EVERY time. If jobs are going to be cut due to regulation on businesses, someone in elected office should be responsible, not some extremely obscure commission.
Anyways, if you haven’t been following the debate over the minimum wage between the Governor and legislative Democrats, here is a short breakdown:
- The Democrats want to raise the minimum wage.
- The Republican Governor wants to raise the mandated wage.
- Republican legislators, overwhelmingly, do NOT want to increase the mandated wage.
- The Republican Governor wants a $1 an hour hike.
- The Democrats also want $1 (they would probably go for $10 if they could), but also want to create an ‘auto-pilot’ indexing to inflation of the mandated wage).
- The Governor had one of the few GOP supporters of this regulation on business, Senator Abel Maldonado, introduce his $1 hike in the mandated wage.
- Democrats killed the Maldonado bill, and are quickly moving their own ‘indexing’ version through the legislature.
- The Governor petitioned the Industrial Welfare Commission to increase the wage by administrative action.
OK, this bring me to the ‘outrage of the week’: Apparently this obscure commission had four members whose terms had expired. Late last week Governor Schwarzenegger re-appointed two Democrats who had previously been put there by the now-disgraced and recalled Gray Davis. To add insult (to Republicans) to injury, the Governor than added TWO MORE Democrats to the commission. All four of these are FOUR-YEAR appointments.
Just to look at one appointment — to the important position of Chairman (text from the Sacramento Bee):
BAD POLICY
In his letter to the Industrial Welfare Commission, Schwarzenegger says that, "The minimum wage should set a reasonable floor for entry-level wages in a manner that does not affect the availability of entry-level jobs or inhibit job growth."
Earth to Governor: Increasing the mandate on employers, forcing them to artificially raise their salaries instead of relying on the free-market system is GOING TO INCREASE COSTS and IS going to COST JOBS as employers have to figure out what to CUT in order to deal with the new costs to their business associated with the mandated wage increase.
As Nobel-Lauriat Economist Milton Friedman succinctly put it:
In an exclusive column for the FlashReport, Republican State Senator Bob Dutton made some very salient remarks about the real impact of an increase of the minimum wage:
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!
Anthony Archie, of the Pacific Research Institute, had this to say in a recent column on the proposed hike in the wage mandate:
Forcing employers to pay more money to their employees than the market dictates is extremely poor public policy.
BAD POLITICS
The Governor supporting such a policy, in fact ADVOCATING IT is also poor politics. The very conservative activists that the Governor is trying to motivate to vote, and to help get out the Republican vote this November are fed up with ‘big government Republicanism’ like we have seen in Washington, D.C., with the unheralded growth in spending there. Governor Schwarzenegger embracing this liberal policy is only serving to create doubt in the minds of GOP voters about whether the Governor is an advocate for a free-market system. It doesn’t help that this recent support of the wage-hike represents and about-face from previous years when the Governor vetoed mandatory wage-hike bills that the Democrats put on his desk.
It is not too late for the Governor to change his approach on this issue — which is disturbing because it is such a BASIC economic position of conservatives, and of Republicans.
Either way, the whole maneuver of stacking a state commission with a bunch of Democrats leaves a bad taste in the mouth of this conservative who worked very hard to elect the Governor.
In the end, despite actions like this one, the decision to who to vote for in November, between Schwarzenegger and Angelides or Westly, will be a no-brainer. The two Democrats would make stunts like packing commissions with Democrats the daily norm. But it is sure frustrating to see this kind of thing.
It gives one pause.
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