Campaign Update

Democrats Back Job-killing Wage Policy

02/11/2014 | News |

What a difference one vote makes.

A new Lieutenant Governor—that’s all that was needed for Democrats to reorganize the Senate, and now they’re taking full advantage. The changes are striking, and to see that, you need look no farther than the  committee vote on legislation raising the minimum wage to $9.25 per hour, $2 above the federal minimum wage.

The vote in the Commerce & Labor Committee yesterday was 10-6. The AFL-CIO, SEUI, the United Food and Commercial Workers International, Progress Virginia, and Virginia Organizing were all there to speak in support of the bill before Commerce & Labor. When the vote was taken, union representatives even exchanged high fives. It was a clear victory for Big Labor, but not for the workers they ostensibly exist to protect.

The truth is, a massive minimum wage hike like this is bound to hurt the very people it’s supposed to help. That’s because only 4.7% of minimum wage earners are poor adults (age 25+) working full time and trying to raise a family, while nearly 2/3rds of all minimum wage employees are children or young adults enrolled in school. A higher minimum wage means better pay for some, but also fewer jobs—at a time when we’re already moving in the wrong direction.

There are 1.2 million fewer Americans working today than there were six years ago, and teenage unemployment has skyrocketed to 20.7%. The U.S. labor participation rate is at its lowest ebb since 1977. Anyone with even a rudimentary knowledge of economics would understand that now is not the time to engage in job-killing social engineering.

And make no mistake: raising the minimum wage does kill jobs. In 1981, a Democrat-controlled Congress established the nonpartisan Minimum Wage Study Commission, which concluded that a 10% increase in the minimum wage reduces teenage employment by 1-3%, a range validated by several later studies. This proposed 28% increase, then, could increase already stratospheric teenage unemployment rates by 3-9%. Still worse, the effect can be unusually pronounced when the economy is weak. When the minimum wage rose 41% between 2007 and 2009, the teenage jobless rate increased 10%, twice the rate of the overall decline in the job market.

Why does that matter? Because those jobs are an entrée into the labor force, a way to help pay the bills while furthering one’s education, and an important way that teenagers and young adults learn responsibility and prepare for better positions within the workforce. And they’re imperiled by this legislation.

Other jobs are, too. Jobs are already being displaced by automation and consolidation. A two dollar increase in the minimum wage may sound good—it isgood, if you’re one of the “winners”—but it’s not so great for those who lose their jobs. Very few people remain in minimum wage jobs for long, but a tragically high number of the unemployed remain jobless.

Union representatives are high-fiving right now, but Virginia workers have no such cause for celebration. A minimum wage increase, while benefitting some, would result in the shedding of a significant number of jobs at a time when our economy can ill afford it, and those when those whose jobs are cut would struggle to re-enter the labor force.

Fortunately, although this bill may pass the Senate, it’s dead on arrival in the House. But what a difference one vote makes in the Senate. What a difference it makes for Democrats to control the Governor’s mansion and the Attorney General’s office. Now, don’t think it came cheap: last year organized labor gave Virginia Democrats nearly $6 million, including over half a million dollars to Mark Herring and an astonishing $2.9 million to Terry McAuliffe. But if this is an augur of things to come, it may well prove worth every penny Big Labor spent.

Best regards,

Mark Obenshain

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