by Kerry Thomas
February 2, 2012
It’s another election year, which also means it’s time for
another economics lesson.
The Government does not create (or save) private sector
jobs. The only way government can
create a job is by expanding the size and scope of government. Government jobs are paid for by the
Taxpayer. Every dollar spent by
government must be first taxed away from the private sector. And every dollar borrowed and spent by the
government must be repaid by future taxpayers.
It doesn’t matter if it’s Barack Hussein Obama or Scott
Walker making the claim. Government
does not create jobs.
What government can do is enact rules and regulations to
either inhibit economic growth or allow it to flourish. When government wants to inhibit economic
growth it makes certain economic activities more expensive. It raises taxes and imposes bureaucratic
regulations on that activity.
If you want more economic activity, cut taxes and cut the
bureaucracy on that economic activity. If
you want more private sector jobs, reduce the bureaucratic costs of doing
business. If you want fewer jobs,
impose more government bureaucracy.
To illustrate, let’s look at the government-imposed minimum
wage, which arbitrarily sets a wage rate businesses must pay employees with
little or no job skills.
Republican Presidential candidate Mitt Romney recently said he supports automatic
increases in the minimum wage.
Proponents of the minimum wage say it must be a “living
wage” with little or no regard as to how productive a new employee may or may
not be to an employer. They do not
understand profits and losses from the small business owner’s perspective.
There is a point where an employee’s skills are worth at
least the minimum wage, and where their skills are not worth paying that
employee the minimum wage. Set the wage
point too high and it costs a business more to hire and train an employee with
no skills than the economic productivity that employee can bring to the
business.
Wisconsin’s
minimum wage is currently $7.25 per hour, the same as the federal minimum wage. Some employees’ skills are worth that much
and more. According to the U.S. Bureau
of Labor Statistics, in December, the average hourly wage for all employees on
private nonfarm payrolls was $23.24.
But some employees’ skills are not worth the current minimum
wage. While the official U.S. unemployment rate
is currently 8.5% nationally, the unemployment rate among teenagers is
currently 23.1%.
It’s yet another case of the economic law of supply and
demand.
When the demand for employees is high, wages naturally
rise. For example, in Williams
County in North Dakota, where there is a small labor force and high demand
for employees in the developing Bakken
oil fields, the unemployment rate is 0.9%.
Fast food restaurants are paying $14/hour just to get positions
filled. Delivery drivers are making
$1000/week.
If an arbitrary, mandated minimum wage of $7.25/hour is good
for society, why not make it $14/hour?
Why not just say every employee must be paid at least $25,000/year? Why not make it $100,000/year?
A true minimum wage is a pay rate where an employer pays an
employee the minimum level of compensation for which that employee is willing
to work. It follows the natural
economic law of supply and demand.
In Williams County, North Dakota, the private sector minimum
wage is $14/hour.