Sunday, June 15, 2014

Lessons of Walmart

It's a purely political argument that seems to flare up every 5 or 6 years. How do we help the working poor? The plan the President has put forward as a talking point during the midterm election cycle is the idea that if we raise the minimum wage to $10.10 an hour, everyone will benefit, yet people on the right tend to disagree.

The statistics can be skewed to show pretty much any outcome that you want. Does it increase the standard of living? Does it increase unemployment? Does it increase the cost of goods and services? In the end, does it help or hurt the economy? 

Well, right now the economy sucks, we are growing at paltry rates, household income is dwindling, and unemployment is at generally unacceptable rates. It's been six years since a minimum wage hike so let's just say that the economy sucks because the economy sucks and that the only way to fix it is to start forcing businesses to pay their employees more.

Yeah, I didn't think that you would stop reading with that point. The point I do want to make is this, there is a place in America where the economy is booming, and they don;t care about the national debate on the minimum wage. You know why? Because you could raise it to $10.10 per hour and it wouldn;t change a thing. You could change it to $11, $12, $13, heck, even Seattle's new $15 per hour wouldn't change a lot in one part of the country.

I'm talking about the boonies of North Dakota. We're an energy boom has caused the modest-sized town of Williston to rise above the fray of this issue that is marched out  a Wal-Mart in Williston, North Dakota is offering starting salaries of $17.40 per hour.

The reason that this particular Wal-Mart is offering $17.40 an hour has nothing to do with unions, social justice, compassion, or any other such thing.

Instead, it’s simple supply and demand.

In particular, the article says that fracking has made it possible to access oil which had previously been unobtainable. This has driven the unemployment rate to less than 1% in the city where this Wal-Mart is located. With that much money flowing through the local economy at such a high rate

This is the anecdotal situation that allows someone to want to see people make more money without the burden being pushed on to every business in America. There is no political courage in demanding a higher minimum wage be paid to someone else by someone else. The goal should be an economy where there should be no need for a minimum wage. At a time when real wage growth has been behind the growth of CPI and inflation for several years running. Demanding a minimum wage increase now is like hiring a maid service for your house when you know there is a dead skunk under the deck, you are not addressing the main problem.

We need to address the economy. The approach set forth by Obama back in 2009 and 2010 was not a solution. It was to subsidize the shortfall of a down economy for a short while in the hope that the economy would correct itself. Well, that didn't pan out.... at all....

Now the plan being put forth isn't much better, short term projects trying to kick start long term employment. Again, he just doesn't seem to understand that with new EPA regulations, Healthcare regulations and taxes, and an administration that attempts to take away almost every and any tax for businesses under the guise of 'paying their fair share'. There is nothing about this current economic environment that says 'Hire me!' Especially when you don't even know how much that new hire is going to cost you between the debate of what the minimum wage and if there will be another delay in the Obamacare mandate.

Stop passing laws that only have one or two years of effect. Stop adjusting due dates for mandates. Stop threatening any and every tax credit under the sun year after year. At this point, I think that the best thing we could do for the economy is somehow just freeze everything for 10 or more years. It's wishful thinking at this point as I've never heard of a President trying to change so many things as far as regulation and tax code in such rapid succession.

Take a hint from North Dakota and the town of Williston. Look for ways to get out of the way of capitalism and production. Creating mandates doesn't increase production. Raising taxes doesn't make more money. And trying to solve a wage problem through wage laws makes as much sense as losing weight by demanding diet food at McDonalds.

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