Ravenwood - 04/08/04 06:30 AM
Unless Governor Erlich vetoes the bill, the People's Republic of Maryland could become the first state in the U.S. to mandate a living wage. In its current form, the bill that is moving through the state senate would mandate that all firms with state contracts worth more than $100,000 pay their employees at least $10.50 an hour. I'm not entirely sure where they got the $10.50 figure. (Why not $25; why not $125?) It appears to be pretty much arbitrary, as are most minimum wages. The ones that will really suffer are the low-skilled workers.
Let's say that you're a low skilled high school kid looking to make a few bucks over the summer. A landscaping company needs someone to help mow the lawns at the state capitol. You know how to work a mower, and the company is willing to pay you $5 per hour for your labor. You are willing to work for $5 per hour, but along comes the government, who steps in on your behalf and prevents you from selling your labor for $5 an hour. Instead, they demand that you charge $10 an hour for your labor. The owner can't afford to spend $10 an hour on a guy that only knows how to mow, so he decides to hire a guy who can use both the mower and the edger. He's stuck paying him $10 an hour, but at least he's getting someone a little more learned about the job. At $5 an hour, the more skilled worker would never have taken the job, but because the government intervened, on your behalf you're priced out.
The example is a bit oversimplified, but it's perfectly valid. Here's another.
The same landscaper's business is booming. Under normal circumstances, he would hire several crews totaling 25 people, but his contracts can't afford to pay all 25 people a "living wage". At $10 an hour, the talent pool opens up quite a bit, and he instead opts to hire 15 people who work faster and more efficiently than would the 25 people making $5 an hour. His cost structures are a bit high, but by taking advantage of greater worker efficiency (because of the higher wage) he can get by with less people. In the microeconomic sense, the economy just suffered a 40% job loss because of the so-called "living wage".
In the end, the low-paid, low-skilled workers are the ones getting screwed.
Wow - I made $7.40 out of college. Never knew I was such a lowlife. I mean, obviously, I starved to death and lived on the street, right?
hln
Posted by: hln at April 8, 2004 1:28 PMObviously you didn't learn much in college, hln.
Posted by: Lee at April 9, 2004 1:49 AMOf course, there's the other effect. Landscaping and maid service companies cannot find people who can work fast enough to be profitable at $10.50. (The lawnmower may limit the speed, not the man, e.g.) So they go out of business, raise their rates, or hire illegal aliens that they can have deported if they start demanding the legal wage. It gets hard to find lawnmowing and maid service, except the ones where no one speaks English and they mow the flower beds. Old men drop dead trying to mow their lawns themselves.
Liberals never recognize how such problems tie back from their favorite policies, or how their zoning laws and environmental laws have created homelessness by pricing the working poor right out of the housing in their communities.
Posted by: markm at April 11, 2004 10:31 PMOf course, by doubling the cost of minimum wage labor, you're also going to induce a bit of inflation-because the unit of labor that used to cost only $5.25 now costs $10.50, and isn't necessarily producing more output.
Posted by: Heartless Libertarian at April 12, 2004 11:02 AMOf course, if you had read the bill, you would know that kids 17 and under are exempt from the bill for precisely that reason.
Posted by: David at April 23, 2004 7:59 AMAhh, so it's descriminatory as well. I wonder how many kids will be fired when they turn 18, to stave off the $5 per hour pay increase.
Posted by: Ravenwood at April 23, 2004 9:17 AMNo, just prudent. The point was to help working families get off welfare and put food on the table - and in so doing save the state money...not snotty well-off college kids doing seasonal summer work on a state contract.
If that's descriminatory, so be it. Under the age of 18 folk can't do or have many things that people "of age" get. Get over it.
Posted by: David at May 2, 2004 12:03 PMHeartless,
Get the facts straight. It doesn't raise all minimum wages...just that very small fraction (.o4%) who do some work under state contracts....so the state isn't subsidizing poverty for families. Small businesses or contracts under $100-k are also exempt.
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