Minimum Wage Gets the Axe

The House of Delegates has killed the move to raise the minimum wage in Virginia from $5.15 per hour to $7.15 in 2008. (Read the account in the Virginian-Pilot.)

I know all the free-market arguments against minimum wage, but I had nearly convinced myself that raising it wouldn’t hurt. So few people are making minimum wage these days — heck, my family pays $10 an hour for babysitters — that there would be little real-world consequence. Raising the wage would let liberals display their compassion and would let conservatives prove they weren’t cold-blooded reptiles, but low-wage workers wouldn’t be priced out of the labor market because hardly any of them were getting paid the minimum wage anyway.

Fortunately, a dinner-party conversation with a friend brought me back to my senses. My friend (whom I won’t mention by name because he had no idea that I might quote him) runs a company that employs people with a broad spectrum of pay levels, including a number of low-skilled, low-wage workers. His concern with minimum wage was this: Although he might hire someone at minimum wage, he would move them quickly up the pay scale as they proved their competence and gained on-the-job skills. Starting someone at a low level afforded him the flexibility of increasing their pay at intervals, thus creating an incentive for performance. Raising the minimum wage, he explained, would compress the pay differential between new employees and those who had proven themselves. Either morale would suffer for the proven employees, or he would have to raise their wages to maintain the pay differential, which would have increased his costs across the board.

The reality in today’s marketplace is that only a tiny fraction of workers earn minimum wage, and they tend to be the most junior, least experienced members of the workforce. “Living wage” advocates argue that it’s impossible to raise a family on $5.15 an hour. I quite agree. It would be barely possible to support oneself on that level of pay. But, I would hypothesize, the number of heads of household making $5.15 an hour is infinitesimal. (I would like to see the numbers.) I don’t envy anyone at the bottom of the wage scale, but I think the system will work better — including for low-wage employees themselves by providing an avenue of upward mobility — if we businessmen run their businesses as best they can.

Update: The Washington Post has a story about the Democratic Party practice of filming committee hearings and posting them on YouTube as a way of holding Republicans accountable for killing bills without recording the vote. Writes Tim Craig:

On Thursday, after House Republicans killed several proposals to increase the state’s minimum wage in an unrecorded vote, furious Democrats put a video of the proceedings on, a party blog. Democrats have made changing the hourly wage to $7.25 a key part of their agenda.

The Republicans, apparently, aren’t very happy about it. I may disagree with the Democrats on the substance of their stance on minimum wage, but I agree that transparency is good for the political process. Good for them!

Note: The Virginian-Pilot says the Democratic initiative would raise the minimum wage to $7.15 an hour, the Washington Post says $7.25 an hour. Someone needs to get their story straight.

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3 responses to “Minimum Wage Gets the Axe”

  1. Larry Gross Avatar
    Larry Gross

    JB – how about telling us who determined the fate of the legislation and the “yes” and “no” votes?

    Would you consider the GA’s method of killing legislation open and transparent to citizens?

    How about legislation you might support?

    Would you also be “ok” with it being killed with a psuedo-secret vote?

  2. Anonymous Avatar

    Too bad we can’t also see video files from Kaine’s office. The GA needs reform and more transparency as does the Executive Branch.

    What side deals were cut before Kaine decided to send the DTR to the MWAA? I initially thought that would be a good move until I learned that the MWAA is a secret club.

  3. Ray Hyde Avatar

    That’s an interesting perspective. I never really thought about it that way.

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