Every good New Hampshire Democrat knows that the best way to have an immediate impact on jobs and the economy is to increase the cost of doing business. Making it cost more to run a business acts like a tax on the business owner, and Democrats love taxing business.
Enter HB127, An act relative to the state hourly minimum rate.
Rep Tim Horrigan and admitted socialist Peter Sullivan (New Hampshire Democrats), are unsatisfied with the machinations of the Federal government in the value of labor relative to the task at hand and are certain that they know better, not just than their Federal master in D.C., but better than every employer and employee in the entire Granite State, what any hour of labor is (at minimum) worth.
This is an annual affair and every year we have to revisit why Democrats trying to raise the hourly rate is actually a tax on the business owner who must absorb that expense by reducing other costs or by raising prices-passing the labor tax on to you.
If you’d like a nuts and bolts math-based explanation, go here. Rick Barnes has composed an excellent article at New Hampshire Insider that explains the costs of meddling with the cost of labor.
Or, we can go with my observations on Jan 1st, 2011 when Democrat Mike Brunelle proposed a minimum wage increase.
Take 2011-H-0239-R for example. Mr. Brunelle would like to raise the minimum wage. But this is a hollow populist act with a real world consequence. It reduces opportunities for unskilled or under-skilled workers seeking or trying to retain entry level positions. It adds to the cost of goods and services. And it increases joblessness, which is a cost borne by taxpayers through unemployment benefits and the loss of economic activity.
How about this for a narrative. New Hampshire Democrats want to raise the minimum wage to help offset rising electric rates resulting from Democrats forcing RGGI on electricity generators?
All you need to know is that when Democrats meddle in the market everyone suffers and the opposite happens. Every time.
Raising the minimum wage above the current Federal rate will do exactly the opposite of that which Democrats claim for raising it. Instead of making more take home pay many employees will simply work fewer hours, pay higher prices, or have a harder time even getting a job.
Raising the minimum wage will make it more difficult for teenagers and under-skilled workers to get work. Learn-while-you earn begins to lose it’s value when the State forces employers to pay more for entry level jobs. Where the employers had previously been willing to use their own money to train new entrants to the workforce, artificially inflating the value of that labor makes doing so less cost effective. It is more cost effective to look for and hire more experienced, older workers, who will take less time to train, mitigating costs associated with a longer learning curve.
And isn’t this just the best time ever to make it harder to find work?
Artificially increased labor costs will appear in the cost of goods and services detracting from the point of raising wages while reducing commerce and–ironically–generating less tax revenue for Democrats in Concord.
What? Oh yeah. All the factors Democrats rely on for revenue will be negatively affected by forcing labor costs up.
If Democrats really want to do something to increase wages might I suggest that they simply cut business taxes instead?
Over time business owners will use that savings to grow their business and it can attract new businesses and more jobs. Employers can use tax savings to offer more products or services that attract more customers. More customers allows them to hire more people. Greater demand on the labor pool pushes wages higher all on its own. Entry-level wage rates will go up all by themselves–with the employer still paying freight for teaching job skills when needed. Existing employees will find themselves getting raises sooner or more often. Employers will have the option of providing better wages and benefits to those qualified to earn them. And all while keeping prices stable or possibly driving them lower due to increased competition, all of which will…eventually bring in more revenue to Concord.
Raising the minimum wage will attract fewer new businesses, reduce job opportunities, retard expansion, limit choices, decrease hours, lower benefits, leave youth and unskilled workers unemployed, stagnate the labor pool, increase the welfare burden, increase the cost of goods and services, increase the cost of living, and result in less revenue in Concord, requiring them to insist on rising taxes.
Is that why Democrats like the idea so much?
Steve has been recognized as the Americans For Prosperity Blogger of the month for December 2012