"Living wage" mentality reflects misunderstanding of business reality

Fast food workers in seven cities were on strike last week demanding a "living wage" of $15 an hour, more than twice the $7.25 they currently make. Empathy aside, this expectation is a fantasy.

Every job has a value, but it is based not on what the person who has the job thinks it should be worth, or what sympathetic observers think it should be worth, but on its role in the business.

How important is the job to the business, compared to other jobs? Are other people who can do the job a scarce commodity, or are there thousands of them? Some jobs require substantial training, while others do not, and individuals with the required training deserve higher pay than those without training. Minimum wage jobs in the fast food industry require no formal training; the worker can learn on the job, and while the worker is learning to do the job satisfactorily, the boss endures lower-than-necessary productivity.

Who exactly works for the minimum wage? These jobs are entry-level work intended for people just getting started in the workaday world, like students trying to earn a little money while pursuing their education, or people with little or no skills or experience looking to get some skill and experience. About half of the 1.6 million minimum wage workers are under 25 years of age. The minimum wage is not intended to be, and cannot be, a “living wage.”

The minimum wage is, indeed, a low wage, but most of those workers get a raise in less than a year, and there are fewer of them today than in the past. The number of people making at or under the minimum wage today is 28 per 1,000 wage and salary workers, while in 1976 there were 79 per 1,000 wage and salary workers.

Most employers want the best workers they can find, so if most workers produce 10 of something an hour and Joe can produce 12 an hour, or if Mary’s work is of higher quality than other employees, the boss is likely to give them a raise to keep them on staff.

For people in minimum wage jobs with few or no skills, demanding their salary be doubled to a "living wage" is somewhat akin to high school students demanding they be given a college diploma. And anyone earning minimum wage that is unhappy with it can go look for a better-paying job. If they can't find one, do their best at the current job, and get some training that will qualify them for something better.

An organization calling itself Socialist Alternative illustrates graphically the failure of a “living wage" minimum wage in an article titled "Profit is The Unpaid Labor of Workers."

"Hypothetically, lets assume that our job pays $7.50 an hour and our boss wants us to work for twenty hours," the article says. "At $7.50 an hour for twenty hours, that’s a total of $150. In that same period of time, however, the work we do will probably make $300, $400, or $1000 worth of pizza."

And here's where it gets good: "What does this mean? Just for arguments sake, lets assume we only create $300 worth of pizza. After our boss gives us $150 for our week’s worth of work – meaning our own labor essentially pays our wage – he is left with an additional $150 that he did not work for."

There’s a brilliant bit of insight hidden in that paragraph: "our own labor essentially pays our wage." To the socialist mentality, the only cost of running the pizza parlor is what the boss pays the pizza maker. Everything else – flour, sauce, pepperoni, cheese, insurance, rent/mortgage, electricity, water, sewage, trash pickup, taxes, fees, etc. – the boss apparently gets for nothing, and the money collected for the pizza that is not paid to the pizza maker is ill-gotten gains.

The "living wage" strikers similarly do not understand business, and what happens when wages go up. Raising the minimum wage requires a commensurate raise in all wages, to avoid causing strife among the other workers, and that means price increases that make the business less competitive. That could lead to staff cutbacks or ultimately closing the business.

The strikers and the socialists fail to understand and appreciate the investments of the owner(s), who may have mortgaged their home to finance the business, and managers of larger businesses, who usually have spent years in training and working to get where they are, perhaps starting as a minimum wage employee themselves.

Owners get whatever is left over after everyone else – employees, venders, lenders, taxes, etc. – have been paid. Often, particularly in the beginning or during hard economic times, that is little or nothing. And, few employees work as hard as the owner of a small business, and particularly a new business, yet the Socialist Alternative begrudges them making a decent return on their investment of capital and time.

It’s easy to criticize the boss from the sidelines. The best course for these critics would be their forced entry into the business owner’s world. At their own expense, of course. They would undoubtedly see things differently in short order.

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The Obama “War on Coal” is a disgusting government over-reach

President Barack Obama continues working to destroy the coal industry, most recently by changing carbon emission standards in such a way that a) coal-fired power plants will be heavily affected, b) encourages plant owners to convert to natural gas, and c) will discourage the construction of coal-fired plants overseas.

Rather than work to solve the very real problems of the nation – like unemployment, the economy, his scandal-ridden administration and the troubles on the international scene – he chooses to fight a war on coal through agencies like the Environmental Protection Agency, which impose extreme regulations and severe penalties on the industry.

Federal agencies routinely put regulations in effect without regard for the chaos and harm they will cause. Coal mining and related job losses and other financial repercussions just don't matter to the president and the bureaucrats. To them, the jobs of tens of thousands of Americans and the economies of 27 states are far less important than their narrow ideological goals.

These agencies criminalize behavior through regulations and impose fines or jail time as if those regulations were law. But according to Article I of the U.S. Constitution, only Congress can make law.

These agencies create regulations and penalties because Congress repeatedly fails to determine how measures it passes should be implemented, and allows or directs the Executive branch to decide how to do that. But the Constitution does not provide the Legislative branch the authority to transfer its law-making obligation to Executive branch agencies.

The Founders deliberately set up a tripartite government with specific and limited roles for each of the branches and a system of checks and balances specifically to prevent any of the three branches from assuming too much power, all based upon the concept of a limited government with few and specific responsibilities.

Briefly summarized, the Legislative branch makes laws, the Executive branch administers and enforces laws, and the Judicial branch rules on questions of law and operates the court system.

By abdicating its duty to complete the lawmaking process, and leaving part of that function to the Executive branch, the Congress has failed in its fundamental duty, which is a basic tenet of the Constitution, and it abets the Executive branch in developing its evolving tyrannical persona.

Since the nation's law-making authority resides with the Legislative branch, the rules and penalties federal agencies wield so freely and often arbitrarily are void of any true authority. It is time, therefore, for the people and the states to stand up and say, like Howard Beale in "Network": "I'm as mad as hell, and I'm not going to take this anymore!"

The federal government collectively does not have the authority to target a given industry for destruction, and the Executive branch darned sure doesn't have that authority all by itself.

If any one or more of the 27 states that mine coal want to mine continue doing so, they need to do it as responsibly as is possible and feasible, and tell the federal government officially and formally to buzz off. The time-honored mechanism for restraining an over-reaching federal leviathan is known as "nullification."

The United States seems to be infected by a philosophy like that expressed by entertainer Britney Spears, whose inferior talent actually looks good compared to her abysmal thinking: "I think we should just trust our president in every decision he makes and should just support that, you know, and be faithful in what happens."

Fortunately, Ms. Spears' naive reasoning was not shared by Thomas Jefferson, who had a better idea and suggested that rather than just sit back and allow a president or Congress or judges to arbitrarily alter the meaning of the Constitution, we must make only those changes that have popular consent and do so through the amendment process, which the Founders sensibly included in the Constitution.

Not all amendments have been good ones, of course, as evidenced by numbers 16, 17, and 18 (which was repealed), but that process is far superior to what we have done and are doing to the first 10 amendments the other way.

It is indeed sad to observe the embarrassing and shameful lack of knowledge and understanding of the founding principles of our country and how legions of Americans who don't know or understand them threaten our very survival as a free nation.

But as bad as that is, it is far worse when our elected officials, who took an oath to "preserve, protect and defend" the United States Constitution, share in this ignorance. Or worse, if they ignore their oath in favor of not preserving, protecting and defending the Constitution in order to "fundamentally transform the United States of America" to meet some foreign ideological vision.

Just how many of our 535 elected representatives in Congress and the hundreds of thousands of other federal employees – including the president and his cabinet – really understand the supreme law of the land, the United States Constitution, is unknown. But watching Mr. Obama's behavior and the behavior of the rest of the government suggests that number is horrifyingly small.

Ignorance is bliss, they say. But not in our government.

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Foolish big-government policies continue to impede economic recovery

Economic news continues to be slightly positive, with May's numbers a mixture of good and bad.

Unemployment ticked up one-tenth, from 7.5 percent to 7.6 percent and, oddly, that isn't as bad as it seems, because 420,000 people who had dropped out of the labor force thought that the environment had improved sufficiently to start looking for work again last month. Had those folks remained on the sidelines, the rate likely would have held at a too-high 7.5 percent. However, 101,000 of those new job-seekers didn't find work, pushing the unemployment rate up.

The influx of new job-seekers, however, moved the labor force participation rate from 63.3, a 34-year low, to 63.4.

New jobs totaled 175,000 last month, a little better than the 155,000 average of the last three months, but most were low-paying jobs that are not likely to increase consumer spending. And that number is well below the number needed monthly to make real progress in lowering the unemployment rate. The Federal Reserve Bank of Atlanta's calculator shows that more than 400,000 new jobs per month will be needed to get the unemployment rate down to the full-employment level of 5.0 percent in a year, and nearly 261,000 new jobs a month to hit 5.0 percent in two years.

Four years after the $1 trillion stimulus package that was supposed to generate a 5.1 percent jobless rate, we are still a long way from that number with unemployment 50 percent higher than that. And as long as consumer confidence remains low and business uncertainty remains high, unemployment will not change much.

Businesses that scaled back workers during the recession continue operating with fewer employees, uncertain of how their costs may increase through higher taxes and costs related to health care reform, and won't hire more workers until those uncertainties are put to rest, or until there is a surge in consumer demand. However, consumers also are nervous about spending in the current economic environment, and are waiting for stability.

Last Thursday's Labor Department numbers showed that non-farm productivity, defined as output per hour of all workers, rose at a 0.7 percent annual rate in January through March, reversing the trend in the last quarter of 2012, as the economy sputtered.

One explanation for the recent pickup is that businesses saw higher demand for products and services over the winter, and that typically leads to higher wages for workers, ultimately improving living standards. However, it might also mean that employers are getting more out of their current workforce and thus have no urgent need to hire, which does not improve the unemployment picture.

On the topic of health care reform, the public has never embraced the Affordable Care Act known as Obamacare, and is even less enamored of it today, according to a new Rasmussen Reports national telephone survey.

Rasmussen found that only 41percent of the 1,000 likely voters that participated now hold at least a somewhat favorable opinion of the health care law, while 54 percent view it unfavorably. A tiny 15 percent view Obamacare very favorably, while 40 percent have a very unfavorable view of the law.

A slightly better rating appears in the new NBC News/Wall Street Journal poll, which shows that 49 percent of Americans say they believe the Affordable Care Act is a bad idea, while just 37 percent say it is a good idea. Like the Rasmussen poll, the NBC/WSJ poll had a substantial number of participants who strongly believe Obamacare is a very bad idea, at 43 percent.

These numbers reflect an increase in unpopularity since July 2012, when 44 percent of NBC/WSJ poll respondents called it a bad idea, while 40 percent called it a good one.

Some of the reasons for this unpopularity are that while the Affordable Care Act promised to lower premiums for families, regulators decided to impose a 3.5 percent surcharge on insurance plans sold through federally run exchanges. There also is a $63 fee for every person covered by employers, and a "premium tax" that will require insurers to pay more than $100 billion over the next decade. The Joint Committee on Taxation expects insurers to simply pass this tax onto individuals and small businesses, boosting premiums another 2.5 percent.

Earlier this year, the Congressional Budget Office said that 7 million people will likely lose their employer coverage thanks to Obamacare — nearly twice its previous estimate. The CBO said that number could be as high as 20 million.

And in December, state insurance commissioners warned Obama administration officials that the law's market regulations would likely cause "rate shocks," particularly for younger, healthier people forced by Obamacare to subsidize premiums for those who are older and sicker.

Combined with the other liberal policies that have caused the recovery to stall for four years, the unpopular federal takeover of health care deepens uncertainty for businesses and raises insurance and health costs for consumers. Then there is Obamacare's planned involvement of the IRS.

A stagnant recovery and pain and suffering are what happens when the narrow ideological dreams of the ruling elite take precedence over addressing the real needs of Americans.

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Americans have been sequestered by their elected public servants

The Mercatus Center at George Mason University has produced an economic report using The Budget and Economic Outlook: FY 2013 to 2023 from the Congressional Budget Office that paints the true picture of the impact of the sequester on federal spending.

It has become standard practice in recent years for the federal government to spend more than a trillion dollars above what it takes in. In 2013 the budget deficit will be a little over $900 billion, adding nearly another trillion dollars to the national debt. According to Mercatus, the government planned to increase spending by $2.54 trillion through 2023. That represents an increase in government spending of 72 percent over ten years.

And then came the sequester, which President Barack Obama told us would wreak all sorts of havoc on the government and the nation, throwing tens of thousands of Americans out of work, and all manner of other horrors.

We were told that the sequester was a cut to government funding levels, but that was not true. The sequester wasn't cutting anything, merely reducing the amount of additional money government got each year over the previous year, so that over that 10-year period spending would only increase by $2.40 trillion. With the reductions in spending increases under the sequester, spending would still increase by 68 percent over ten years. Instead of spending an average of $540 billion more each year, government could only spend $400 billion more each year. What a hardship.

Putting this equation in dollar amounts that people can identify with, let's say that you earn $43,000 a year, -- the average wage in the U.S. -- and your employer told you that each year for the next ten years you would get paid $2,540 more than the previous year. But then the company had a financial crisis and was only able to pay you $2,400 more than last year, about 5.5 percent less. Would you have to sell your second car to make ends meet? Would you have to move to a less expensive home, or eat only bread and beans? Would your life really change at all because your pay raise was $140 less than you expected?

Actually, you could spend money on things just like you did the preceding year, and have money left over.

Returning to the federal situation, how could the government having $400 billion more to spend in FY 2013 than it had in FY 2012 cause such horrific results as those the president warned us about? Well, because those in the position to create horrific results decided to make the most of the situation, and create as much pain as possible.

And why would they do that? Quoting that famous socialist philosopher, former Obama Chief of Staff Rahm Emanuel, "Never let a serious crisis go to waste." In other words, use this situation to help you achieve your selfish goals by creating a lot of pain and blaming it on your political opponents.

And how would they do that? Well, when faced with two possible areas to spend less, where one was painful and the other wasn't -- such as not filling government positions opened through attrition (painless) or releasing illegal alien criminals back onto the streets (painful and dumb), these public servants choose to release illegal alien criminals. Of course, everyone with common sense recognizes that decision is stupid and dangerous, but common sense is unwelcome in this entirely political situation. What matters most to these malpracticing public servants is causing enough pain to get the people to clamor for relief from the painful decisions, and restore things to their pre-sequester status.

This is the path that Barack Obama and the other big spenders chose to try to reverse the sequester that was originally their brain child. It is revealing that the president refused to accept the authority to decide how best to accomplish spending a little less than originally envisioned, which was offered to him by U.S. Senators Pat Toomey (R-PA)  and James Inhofe (R-OK), who authored an alternative to give him discretion to allocate the sequester’s cuts largely as he sees fit. Mr. Obama, who never is responsible for anything bad, wanted no part of it, because then whatever pain couldn't be avoided would be his responsibility.

The president wants to blame new economic problems on the sequester. But the actual effects of the sequester are only to reduce budget increases by an amount small enough that competent managers could adequately and nearly painlessly deal with. But, of course, the president turned down that authority.

The real pain and suffering that occurs after the sequester took effect will have resulted primarily from decisions deliberately made to cause pain for no better reason than to allow the president and our other employees in government to create a situation that benefits them and their spending addiction.

This behavior is the antithesis of the ideal of public service and should earn every public servant who indulges in it a quick ejection from their job. Unfortunately, many Americans are more concerned with outcomes than with following an honorable process to achieve them.

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