Minimum wages are a product of government at its worst. It is no more or less an act of control over business by congress. The late Richard Daley, the “Boss” of Chicago often said he would send one Democrat to Washington to be a Congressman because he was too dumb to be an alderman. Daley also use his “muscle” to get things done nationally and locally.
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Chicago has passed a law requiring the “big-box” stores such as Wal-Mart, Home Depot, and Target to pay each worker, regardless of skill, experience, or education a minimum of $13 an hour by 2010. This wage is broken out at $10 for salary and $3 for benefits. Other cities may soon follow suit.
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Enterprise zones were established to lure business to areas in an effort to trump up economics and decrease unemployment locally. Increasing minimum wages including mandatory health care or benefits packages will defeat this purpose.
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Mandating wage control over the likes of Wal-Mart and Home Depot will only cause these companies to expand and open multiple stores around big cities, not within their borders. In addition, the “everyday low prices” offered by big box stores will become a thing of the past. Unemployment will increase as lay offs take effect.
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FDR and his inept fiscal policies actually extended the Great Depression in the U.S. The anti-business attitude of Roosevelts administration hurt business and did nothing to provide employment because mandatory wage increases and price controls did not allow business to adequately re-invest, expand and hire more people. As costs increase the consumer pays the freight of this consequence and business activity deflates.
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Examine car prices. Safety features are one small cost to the increased cost of manufacturing automobiles. Luxury features also increase the price tag. However, a closer look at the cost of manufacturing an automobile is union control, which drastically effects wages and benefit. which go into the price of the car and comes out of the consumers pocket.
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Time magazine had a feature story in the early 80′s about the UAW, auto worker wages and benefits. They examined one worker who sat on a stool and every few seconds pulled a trigger on a robotic rivet gun. The workers complete wage and benefits package was $80,000 per year. This was 1980 and we wonder why the “Big-3″ U.S. automakers are constantly in trouble. Costs have risen, UAW workers have very large wages and benefits all controlled by someone other than the business.
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Americans are still willing to pay for expensive cars but how long will they shop at Wal-Mart and Home Depot when prices hit the ceiling? How long will Wal-Mart be willing to pay a greeter $13 per hour? That individual will no longer have a job.
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Reported in the Wall Street Journal, a study by the economics firm Global Insight calculates that the presence of Wal-Mart and other low-price retailers saves working families on average more than $2,000 a year. MIT professor Jerry Hausman has found that, although Wal-Mart does slightly reduce wage rates in nearby areas, its lower prices swamp that effect. The biggest beneficiaries are families with incomes of less than $10,000 for whom “a super center makes a 30 percent difference in what they can buy.”
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WSJ further notes, when activists kept Wal-Mart out of Chicago’s South side last year, the company opened the store in nearby Evergreen Park instead. Now that store collects an estimated $530 million a year in sales from Chicago residents without a penny of sales tax going to Chicago. The location where Wal-Mart was going to build remains an empty lot. Partly as a result of such anti-business policies, Chicagoans spend $5 billion a year shopping in the suburbs.
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It’s business as usual in Chicago but this time the “dumb” Democrat isn’t going to Washington, he and she reside in their over paid positions on the City Council. That’s Chicago “Muscle!”
