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Did the Battle for Higher Minimum Wages go Into Reverse?

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Published : April 07th, 2017
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Category : Opinions and Analysis

There is a new pushback against minimum wage hikes.

With republicans in complete control nationally, odds of meaningful legislation are the national level are slim.

And at the state and municipal level, some places that passed hikes want to scale them back or eliminate them.

The Wall Street Journal asks Has the Movement to Raise the Minimum Wage Reached Its Limit?

Cities and counties from Portland, Maine, to Los Angeles have successfully passed local minimum-wage increases, but recent resistance in seemingly friendly territory suggests a momentum shift.

The newly elected Baltimore mayor last month vetoed an increase of the local wage floor to $15 an hour by 2022, despite favoring the policy as a candidate. Earlier this year, the top elected official in Montgomery County, Md., outside Washington blocked a similar measure despite the county previously being at the forefront of local minimum-wage increases.

“I want people to earn better wages,” Baltimore Mayor Catherine Pugh, a Democrat, said in an interview. “But I also want my city to survive.”

Lawmakers in several other states also are pushing back against local minimum-wage increases. At least four municipalities in Cook County, Ill., have opted out of the county government’s move to raise the minimum wage in the Chicago suburbs to $13 an hour by 2020. Iowa Gov. Terry Branstad, a Republican, approved legislation in March to roll back higher minimum wages already approved in four counties. In Flagstaff, Ariz., council members just amended a minimum-wage increase approved by voters in November to slow the pace of increases.

Deli meat producer Dietz & Watson, which employs about 250 workers at a West Baltimore processing plant, threatened to move operations to Kentucky, Ms. Pugh said. The company didn’t respond to requests for comment.

A local businessman, Ron Furman, who runs a craft candle-making business that hires people with employment barriers such as criminal records, told city officials that if the bill were enacted, he would open a planned factory in neighboring Baltimore County.

“There’s a limit when you’re trying to compete with products made in Vietnam and China,” he said.

Cost Spiral and Competition

Manufacturing and service phone support jobs left the US for elsewhere due to wage cost differentials. Although manufacturing is now returning to the US, it is not because wages are rising elsewhere but because robotics eliminated so many people.

Proponents of minimum wage hikes are willing to toss to the dogs small local businesses like the Emily Bruno, the brewery owner mentioned in the above article.

Bruno says an increase to $15 an hour would raise her labor costs by $300,000 a year, nearly equal to the brewery’s annual profit.

States like Illinois already suffer from an exodus of people and businesses. Higher minimum wages and higher taxes cannot possibly help.

The problem is not that wages do not go far enough. The problem is the Fed is hell-bent on forcing prices up in an inherently price-deflationary world.

Related Articles 

  1. Illinois Revenue Freefall: Fiscal Year-to-Date -8.1% and Worsening
  2. Cook County Illinois Suffers Largest Population Drop In Entire US
  3. Central Banks Rethink 2% Inflation Target (In the Wrong Direction of Course)

Mike “Mish” Shedlock

Source : mishtalk.com
Data and Statistics for these countries : China | Georgia | Vietnam | All
Gold and Silver Prices for these countries : China | Georgia | Vietnam | All
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IMG Auteur
Mish 13 abonnés
Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. He writes a global economics blog which has commentary 5-7 times a week. He also writes for the Daily Reckoning, Whiskey & Gunpowder, and has over 80 magazine and book cover credits. Visit http://www.sitkapacific.com
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