Friday, July 14, 2006
Raising the Minimum Wage
Peter Grossman had an interesting column on the economic impact of the minimum wage in the July 11 Indianapolis Star. Opponents of an increase in the minimum wage argue that it will lead to unemployment, while supporters argue it will alleviate poverty. But if Congress is going to increase the minimum wage, why stop at $7.15 per hour? Why not increase the minimum wage to $10 or $12 per hour? For one thing, that would have a significant economic impact on the retail and service industries.
I think there are two larger questions that need to be answered here. Philosophically, is it appropriate for legislators in one city on the East Coast to be setting economic policy for a nation of nearly 300 million people that stretches all the way across the continent, or should this matter be left up to the states? This is an argument that has gone on since the Republic was founded and the Constitution was drafted. The role of federal power was a significant favor in the Confederacy's war for independence over 140 years ago.
More importantly, where in the Constitution does the Congress have the authority to set a mandatory wage floor for workers at the local supermarket? What about the Tenth Amendment, which states that "the powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people"?
I realize the question of Constitutionality is not the most fashionable thing to ask these days, and that the Tenth Amendment has been all but repealed. That question, however, is the most important question to ask any time the Congress passes legislation.
I'm not surprised that Democrats are pushing for an increase in the minimum wage. This is an election year, and they are hoping this is a populist issue that will wedge some of the blue-collar "values voters" away from the GOP. Since a minimum wage increase is also a goal of labor unions, this will likely help encourage unions to give more political help (both money and manpower) to Democrats in the coming election cycle.
I'm disappointed, yet not at all surprised, to see Republicans offer their own proposal for a minimum wage increase. While the increase is smaller than the increase proposed by Ted Kennedy, but it highlights the concern many fiscal conservatives have about the Republican Party. Fiscal conservatives often lament that the difference between Republicans and Democrats is that Republicans will grow government at a slower rate than Democrats. For those who believe in limited government, this is not encouraging.