Raising minimum wage can have unintended consequences across economy

By ROBERT AUGUSTINE
Chairman, Republican Party of Nelson County

ROBERT AUGUSTINE

Saturday, April 27, 2013, 7:40 p.m. — Self-described as “a network of over 1,000,000 activists committed to making a difference, fighting for progressive causes,” Left Action is fighting for increasing the minimum wage.

A recent post to Left Action’s Facebook Page explains necessity for indexing minimum wage for inflation:

“Because of inflation, the real value of the minimum wage declines every year, and it has fallen dramatically in the last few decades, in spite of sporadic increases. You can debate the proper level, but it’s asinine to have a built-in decrease every year, because it’s not inflation-indexed. Representative George Miller has introduced legislation that would raise the minimum wage, and index it to inflation going forward. It makes sense, and it should have been done long ago.”

One response exclaims, “We can tell them [Congress] but the [R]epublicans don’t care.” Many draw similar conclusions from the popular “Republican’s love rich people” narrative.

It’s not that Republicans don’t care. The opposite holds true. Most sane people regardless to affiliation with a political party (or none at all) have empathy for others.

Left Action’s compassion says manipulating the free market is the avenue of compassion. But how can we measure compassion? Some have argued the minimum wage be set at $22 per hour. I could say that’s not compassionate enough.
Why stop at a puny $22? Why not $50 per hour? I care more, so I’ll argue for $100 per hour. Someone else still more compassionate may suggest $200 per hour.

I can hear the grumbling, “damn Republican again, protecting the wealthy with wild ridiculousness.”

Sorry, but if some want to lay claim on compassion based upon the capacity to force business owners pay higher wages, should I not argue for more because I care more?

Not at all. While one can make an emotional argument that opposing mandated pay increases makes for a more caring Congress, increasing the minimum wage isn’t the solution — it’s simply part of the problem.

Conservative compassion argues that it’s our currency, rather than wages, needing the fix. Inflation has broken our economy.

Inflation, driven by borrowing to pay interest on the deficit, is crushing the poor and middle class.

When speaking about inflation, we should talk about a return to sound money, or the gold standard. A gold standard limits the government’s ability to print money. Government risked runs on the gold reserve when printing money as holders of paper currency would convert to gold before the vaults empties. Since President Nixon ended the gold standard and eliminated the last legal check and balance on the Federal Reserve in 1971, the money supply has expanded 13 fold.

In the 1990s, the Federal Reserve manipulated advances in the stock market with massive inflation, but eventually pushing a false economy creates bubbles destined to burst as witnessed in the housing market.

Automobiles now cost more than houses did only 30 years ago. In 1964, minimum wage was 5 silver quarters per hour ($1.25).  Today the melt value of the coins exceed $26.00. In 1992 minimum wage was $4.25, but an hour’s labor could purchase five gallons of gasoline at around 89 cents per gallon. By today’s standard, minimum wage would need to be approximately $18.00 per hour.

Increasing the minimum wage further complicates matters as smaller businesses pass these costs on to consumers with higher priced products, or larger corporations lobby the government for special favors to offset costs, effectively passing the overhead off to the taxpayer rather than the consumer.

Either way, we all lose and the unintended consequences become more government spending, borrowing, debt, deficit, and inflation. The fixed income retirees lose the value of their savings and the poorest pay higher premiums on food, housing–everything.

It’s not compassionate by any standard. After all, what good is a $50 minimum wage if fuel is $30 a gallon and milk is $25.00 a gallon?

Common sense (and caring) solutions include a balanced budget amendment and an audit of the Federal Reserve — both key provisions on the official platform of that uncaring Republican Party. Examining a return to a gold standard would be a nice addition to that list.

An audit of the Federal Reserve is the first step to fixing this economy and has been passed by the US House of Representatives. Curiously, Senate Majority Leader Harry Reid (D) has remained a roadblock in the US Senate.

In 1995, Senator Harry Reid supported an audit of the Federal Reserve. Now he won’t allow an up or down vote in the Senate despite bipartisan passage in the House. Why don’t our nation’s working poor deserve bipartisan support in the Senate?

Has Senator Reid lost his capacity for empathy since 1995? Is he simply playing politics with the printing press?

Visit the Republican Party of Nelson County’s Facebook page at http://Facebook.com/NelsonGOP

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