By John Seiler

The Daily Kos liberal Web site is running a $10.10 national minimum wage campaign:

“To the 113th Congress: 

“The minimum wage needs to keep up with the times, but today, it’s fallen behind, leaving too many working Americans in poverty. Please raise the minimum wage to $10.10 and index it to inflation so that minimum-wage workers won’t have to wait years for a raise.”

And you can sign your name to a petition for it. That amount is above the $9.00 minimum wage President Obama is seeking.

Currently, the federal minimum wage is $7.25 an hour; California’s state minimum wage is $8.00, although there are moves to increase that. And San Francisco imposes $10.55, the highest in the nation.

From the federal $7.25 minimum wage to $10.10 would be a 39 percent pay increase. Who wouldn’t want a 39 percent pay boost?

Well, if we have “too many working Americans in poverty” who have “to wait years for a raise,” why don’t we just increase the minimum wage to $100 an hour? People really could do well on that. It works out to $208,000 a year, about what you need to join the middle-class in high-priced California. People on welfare rolls would be attracted back to the work force. Welfare payments would drop almost to zero. Federal, state and local budgets, no longer having to pay for welfare, would run up surpluses that could be used to fund other great new government programs.

Of course, today only about 5 percent of workers make $208,000 a year. Mandating a $100-an-hour minimum wage would mean 95 percent unemployment.

But raising the minimum wage to $10.10 also would cause unemployment. Businesses would just kill millions of jobs, replacing the fired workers with foreign labor and machines — or just go out of business.

A $10.10 federal minimum wage would put the whole country on the level of San Francisco’s $10.15.  But the whole country is not like SF. In the incredibly expensive City by the Bay, if you can make only $10.15 an hour, you should leave.

To expect low-wage, low-cost Mississippi and Alabama to pay the same minimum wage as S.F. is absurd. I checked Zillow.com. In San Francisco today, the median house price is $763,000.

But in Tuscaloosa, Ala., a nice college town with the University of Alabama, the median price is just $139,000. That’s less than one-fifth as much.

Imposing a San Francisco-level minimum wage on Alabama would devastate the state, boosting unemployment to painful levels.

Hurting youth

Especially hurt would be black teenagers across the country. According to economist Walter Williams:

“With each increase in the minimum wage, black teen unemployment rose relative to whites and teen unemployment rose relative to adult. Why? Put yourself in the place of an employer and ask: If I must pay to whomever I hire $7.25 an hour, plus mandated fringes such as Social Security, vacation, health insurance, unemployment insurance, does it pay me to hire a worker who is so unfortunate so as to have a skill level that allows him to contribute only $5 worth of value an hour? Most employers would view hiring such a person a losing economic proposition.

“Therefore, the primary effect of a minimum wage law is that of discrimination against the employment of low-skilled workers.

 “Teenagers tend to be low skilled. They lack the experience, knowledge and maturity of adults. That means they will be the primary victims of a minimum wage law. But why are black teens more heavily impacted than white teens? Black teens are far more likely to come from broken homes and attend some of the worst schools in the nation. Therefore, a law that discriminates against the employment of low-skilled workers will have a greater impact on black workers. Moreover, the minimum wage subsidizes racial discrimination. After all, if you must pay $7.25 an hour to whomever you hire, you might as well hire people you like the most, even if they are of identical skill.

“The little bit of money a kid could earn after school and on the weekends is not nearly as important as the other benefits from early work experiences. Any kind of job, paying any wage, teaches a youngster that he must be on time, respect supervisors, develop good work habits, plus there’s the self-esteem and pride that comes from being at least financially semi-independent. Early work experiences benefit any kid but are far more important for kids from broken homes, who reside in crime-ridden neighborhoods and attend rotten schools. If they are to learn anything that will make them a more valuable employee in the future, it will have to come from work; they won’t learn it at home or in the schools. For Congress to enact higher and higher minimum wages, to benefit their union supporters, is shameful and cruel.”

Unions like the minimum wage because it destroys lower-cost competition.

Far from “helping” the poor, as the Daily Kos, Obama and many others maintain, increasing the minimum wage would destroy their jobs. More of the poor, instead of enjoying the dignity of a job, would go on the welfare rolls, increasing the cost to taxpayers.

The minimum wage is a perfect leftist program: It destroys jobs and lives while increasing government.

By Mark Landsbaum

If you wanted to destroy an economy, what would be a good way to go about it?

You might take money from those who earn it. Can there be a more perverse disincentive than to take money from people on a progressive scale, such as California’s stair-stepped income tax rates? The more one earns, not only more is taken, but proportionately more. At some point, the earner will say, “Enough is enough” and conclude it’s not worth the effort to earn more.

Next, you might divert money from those who earned it to enrich others. The harder one works, the more one enriches someone else.

Welcome to California, where perverse disincentives abound, and where private-sector workers labor to enrich public-sector employees.

On the November ballot, Propositions 30 and 38 urge Californians to double down on this economy-killing formula by increasing their taxes, which already are among the nation’s highest and most progressive, in order to further enrich public sector workers.

If you wanted to concoct an excuse for such redistribution of wealth, from people who produce it to people who desire it, you might argue that it’s for a good cause. You might say that it’s “for the children.”

On the November ballot, Californians are told that, if they just inflict more of this economy-killing pain on themselves, they can improve public schools. Sure, turning over more of your hard-earned money is painful, but after all, it’s “for the children.” Buck up, Mr. and Mrs. Taxpayer. Your sacrifice will be for a good cause.

Money is fungible

If you wanted to bamboozle voters and taxpayers into buying this swindle, you definitely wouldn’t mention that money is fungible. Pouring more taxes into the pot is no guarantee it will benefit “the children,” despite disingenuous ballot arguments to the contrary. What is certain is that the benefit will go to California public-school teachers, who already are among the highest paid in the nation. And, of course, it will benefit their top-heavy school administrations, which teach nothing.

While bamboozling voters and taxpayers, you wouldn’t want to mention that no amount of money, short of paying for individual tutors for each of California’s 6 million public school children, will substantially improve what emerges at public high school graduations. Los Angeles public schools spent $25,208 per year per public school student, according to an analysis of all school spending conducted by Cato Center for Educational Freedom in 2010, even though the district reported spending only $10,053. Washington, D.C.’s public schools spent $28,170 per student.

(The fact that public schools grossly under-report how much of your tax money they spend per pupil ought to be a red flag to signal something’s amiss. As Cato author Adam Schaeffer explained in his study, school officials “believe certain expenditure categories should not count,” even though things like health and retirement benefits and debt service “are expenses borne by the taxpayer that are used to support the K-12 education system.”)

D.C. schools

If there exists a correlation between how much money is spent and educational outcome, District of Columbia kids ought to be far more accomplished than California kids. Instead, as economist Walter Williams points out, despite spending more money per student than any state, the District of Columbia “comes in dead last in terms of student achievement.”

While persuading voters and taxpayers to act against their own economic well being, you wouldn’t want to mention that the surest guarantee of a quality education is for a kid to come from a home where Mom and Dad read, and encourage junior and sis to do the same. You wouldn’t want to remind taxpayers and voters that no amount of tax increases will change home life for kids whose parents can’t speak English, or where parents don’t bother to instill a work ethic in their children because Mom and Dad didn’t develop one of their own.

It’s painful to admit that the greatest determiner of how kids do in school is their home life. At least it’s painful for public school employees to admit. But isn’t that what every grownup knows in his heart from personal experience and from the experience of public schools?

Californians could double or triple their tax burden and effectively grind the state’s economy to a halt, and pour every dime of it into public schools, and what would the outcome be? Kids still would resemble their parents.

It is no secret that the best public schools are located in the best neighborhoods. Sure, someone will object to this generalization by pointing out an exception here and there. But the fact that the exceptions are exceptions makes the point best of all.

Prop.s 30 and 38

What Props. 30 and 38 on the November ballot will do, if voters buy the spiel, is enrich public workers, most of them public school teachers and administrators. What the propositions won’t materially change is what emerges at high school graduation.

Indeed, these tax increases are extremely unlikely to measurably change the lives of children on path to drop out of school because they are acting out values they learn at home. Parents, and most tragically the lack of parents, particularly the lack of a father in the home, are the greatest determiners of kids’ educational success or failure. Not tax money.

Public school teachers will resist admitting this out loud, even though they are the first to protest that they shouldn’t be held accountable for kids who come to school unprepared to learn. Nevertheless, in the same breath they will insist they can do what the obscenely funded Washington, D.C., schools fail to do year in and year out — if only they can have more taxpayers’ money to do it with.

Don’t believe them.

Voters and taxpayers can take another step in November to dismantle California’s economy by voting to divert yet more of the private sector’s money to feed public schools’ insatiable appetite. Or they can reject the fatuous argument that it’s “for the children,” and say, “Enough is enough.”

Providing more money to a system that consistently fails to do what it is paid to do is unwise. Well-off communities don’t need more money for their well-off children to do well. And economically disadvantaged communities’ children won’t do well simply by pouring more money into their public schools.

Can public schools be improved? Not with more money. But perhaps kids’ education can be improved by letting parents use that money to shop for a better, private school. When vouchers are offered anywhere in the nation, the list of applicants far outstrips the available cash. If the product public schools sell must compete against private schools that can and do provide more for less, the competition will improve both.

The fact that so many parents intuitively recognize that they can improve their children’s lot by escaping the grip of public education speaks volumes. The fact that so many public schools refuse to free the children from their grip speaks volumes about what public schools really are all about.  And it’s not “for the children.”

By John Seiler

Los Angeles Times business writer Michael Hiltzik is an excellent reporter. But when he gets to policy, his leftist perspective comes to the fore. That can be seen in today’s article on Paul Ryan’s budget proposal. Ryan was just picked by Mitt Romney as the Republicans’ presidential nominee.

In any budget article, the first thing to look for is this: The $16 trillion — and counting — debt the U.S. government has run up. If that isn’t mentioned, then the article isn’t serious. That’s the equivalent of one year’s total U.S. GDP. Not mentioning the national debt is like a person discussing his family finances without mentioning that he’s run up credit card debt equal to yearly family income.

Hiltzik doesn’t mention the debt, nor the $1 trillion-plus additions to the debt from the continuing annual deficits. Instead, it’s all about how Ryan’s proposed cuts would hurt the middle class:

“The more insidious assault on the middle class comes from program cuts. Most of the commentary on Ryan’s budget has focused on his master plan for Medicare and Medicaid, both of which he would gut. But it’s a mistake to think the burden would be shouldered exclusively, or even chiefly, by the poor.”

The Romney-Ryan camp disputes that Ryan would “gut” these programs. And in any case, they are campaigning on Romney’s somewhat different plan because he’s on the top of the ticket, not Ryan’s plan.

Hiltzik also advances the canard that the Ryan Plan would increase taxes on the middle-class. Hiltzik bases his contention on calculations by “the nonpartisan Tax Policy Center” — really a left wing, high-tax group. But that’s not really in the plan. However, it is true that all these numbers, including Ryan’s and President Obama’s, have an air of unreality about them in light of the $16 trillion debt.

Hiltzik doesn’t note that what’s really going to “gut” the middle class — and in fact has for six years now — is interest rates that are kept artificially low by the Federal Reserve Board so the payments on the $16 trillion debt don’t get too high and produce even higher annual deficits. The federal government currently is borrowing money at essentially zero interest.

That hurts the middle class, which is suffering inflation of at least 3 percent, but getting zero percent on its bank and savings and loan savings accounts. An effective decline in value of 3 percent a year for six or more years is a sure way to “gut” the middle class. The poor don’t have much savings and the rich can use sophisticated financial instruments to still make money; you don’t see Warren Buffett suffering.

Eroding wealth

If this zero-interest rate policy continues, the middle class will continue to see its wealth — what’s left of it — eroded. Eventually, the Fed will have to boost interest rates. But then that will boost the federal deficit even higher, raising the debt even faster. Which will lead even deeper cuts in current programs — for the middle class, the poor, the rich, everybody.

Inevitably in a Hiltzik column, there’s a defense of high taxes:

“Ryan advocates cutting the top income tax rate to 25% (from 39.6%, the pre-Bush top marginal rate scheduled to take effect Jan. 1).

“The only way to do so while keeping overall tax revenues at 19% of gross domestic product, Ryan’s stated goal, is to eliminate a wide range of tax breaks. On the surface, this might look palatable to a middle-class taxpayer convinced that the fat cats get all the breaks anyway. In fact, the most popular breaks save billions for the middle class.

“More than 70% of the mortgage interest payments claimed as deductions ($240 billion) appear on returns filed by people in the income range of $60,000 to $200,000, according to the IRS. Many of these middle-class homeowners base their annual financial planning on tax breaks such as the mortgage deduction. Only about 1.4% of the total is claimed by taxpayers earning $1 million or more.”

Actually, this is a fantasy. There’s no way the mortgage deduction ever will be eliminated. Moreover, since World War II ended, the amounting of taxing by the federal government never has exceeded 20 percent of GDP, even when the top tax rate was 91 percent.

So Ryan’s 19 percent threshold is close to the maximum. Hiltzik’s idea that it could go higher is a an illusion. The most that can be wrung from the economy is 20 percent for federal taxation. Try to get more, and people just quit working and investing, or move their money overseas.

100 percent tax?

Moreover, as economist Walter Williams notes:

“All told, households earning $250,000 and above account for 25 percent, or $1.97 trillion, of the nearly $8 trillion of total household income. If Congress imposed a 100 percent tax, taking all earnings above $250,000 per year, it would yield the princely sum of $1.4 trillion. That would keep the government running for 141 days, but there’s a problem because there are 224 more days left in the year.”

That is, even if the top income tax rate were 100 percent — and people actually paid it — the money would fund only 38 percent of the federal budget.

And of course, if the government seized 100 percent of the income of “the rich,” they would just stop working. The businesses and factories they own would close, or be taken over by the government as socialist enterprises.

So, “taxing the rich” isn’t the answer.

Ryan Plan

The real problem with the Ryan Plan is that it doesn’t go nearly far enough. It doesn’t balance the budget for 30 years — which practically means never. In every one of those 30 years, Congress can change whatever it did before.

The fact people don’t want to face, for understandable reasons, is that the whole welfare state now is bankrupt. It’s the result of 80 years of profligacy, and especially of the last 11 years of blowing out the budget that began under President George W. Bush. He inherited deficits from President Clinton. With a little prudence, he might have helped us grapple with the difficulties of paying for the existing entitlement programs. Instead, he goosed the budget with his No Child Left Behind education scheme that has shown zero results; and especially with his Bushcare Medicare expansion, a precursor to Obamacare — not to mention the expensive wars.

So what’s the solution? Massive cuts. Or inflation to burn off the value of that $16 trillion national debt. Either way, there’s massive pain for the middle class, the poor — and for many of the rich, too, if they don’t get their affairs in order (or move to a country with more freedom).

Humans, especially Americans, like to think there always are solutions, preferably instant ones. But this time there aren’t any — any, at least, that people want to advance.

The problem with democracy is that, eventually, 51 percent of the people realize they can vote to rob the other 49 percent, as well as borrow money on the credit card of the 49 percent. That lasts a while until the whole thing falls apart.

Which is where we are now.

Unlike some journalists, make sure you keep in mind that debt of $16 trillion — and counting.

By John Seiler

It seems that no bad idea goes unpassed in the California Legislature. Yesterday the Assembly Labor and Employment Committee passed AB 1439, by Assemblyman Luis Alejo, D-Watsonville. It would increase the minimum wage in California by the rate of inflation, while preventing decreases during times of deflation. Currently, California’s minimum wage is $8 an hour, 75 cents above the the federal minimum of $7.25.

But copious research shows that minimum wage laws destroy the jobs of just those workers Alejo and others want to help: black and Latino minorities.

Black economist Walter Williams has pointed out how a high minimum wage “cuts off the bottom rung of the ladder” of employment. Few people stay for long at the minimum wage. Once they prove competence and show up for work on time, employers usually raise their wages above the minimum, or risk losing such good workers to other employers.

What the minimum wage does is make low-level jobs prohibitively expensive for employers. The employers then just don’t hire people, farm out the work to India or China, move the whole company to another state or country or go out of business. Alejo does not propose putting a shotgun to employers’ heads and forcing them to hire people at his new minimum wage.

Williams wrote a classic study on this in 1977, “Government Sanctioned Restraints that Reduce Economic Opportunity for Minorities.”

He pointed out, for example, that if someone’s labor value is only at the minimum wage, but not higher, then raising the minimum wage means that person will lose his job.

Youth and minorities

Williams wrote that two groups of people especially are affected by the minimum wage: youngsters, who have little work experience; and minorities, who may have suffered discrimination, or went to bad schools. And most affected of all are minority youngsters. “These workers are not only made unemployable by the minimum wage, but their opportunity to upgrade their skills through on-the-job training also are severely limited,” he wrote.

He noted that youth employment always is higher than general unemployment, even during prosperous times. And black youth unemployment has been especially bad; it “has ranged from two to three times the unemployment for white youths.” Black youth unemployment, he reported in 1977, in some areas is as high as 50 percent.

That’s one dismal statistic that hasn’t changed in 35 years. The Bureau of Labor Statistics reported that today black youth unemployment remains at 50 percent.

But it wasn’t always that way. Williams pointed out that in 1948 black youth unemployment actually was 9.4 percent —  less than the 10.2 percent of white youth. That situation held until the late 1950s.

So, what happened in the late 1950s to cause the crash in jobs for blacks, especially black youngsters?  Was it racism? It can’t be that, Williams wrote, because racism was a lot stronger in 1948, when Jim Crow laws segregated blacks in the South; and in the North, tacit discrimination was rampant. The great Jackie Robinson debuted as the first black player in Major League Baseball only in 1947. Race relations improved in the 1950s.

The real culprit: the minimum wage was hiked to freeze out black workers, in the late 1950s going up 33 percent, to $1 an hour.

As Williams described it, “The minimum wage law gives firms effective economic incentive to to hire only the most productive employees which means that firms are less willing to hire and/or train the least productive which includes teenagers and particularly minority teenagers. But holding all else constant, such as worker productivity, such a wage law gives firms the incentive to indulge in whatever preferences that they may hold.”

For example, a company might be able to hire 1) a white youth who went to a decent public school at $9 an hour; or 2) a Latino youth who went to a wretched public school, but can be trained, at $8 per hour, the current minimum wage in California. So the company saves some money by hiring the Latino, puts some effort into training, and gets a good employee. But if the minimum wage is hiked to $9 an hour (or higher) by Alejo’s AB 1439, then the Latino youth never will be hired. The white youth will be hired instead because he went to a decent school and doesn’t require training.

That’s how insidious minimum-wage laws are in destroying jobs. As Williams wrote, it allows a prejudiced employer to “discriminate at zero cost.”

Paying for discrimination

But if there’s no minimum wage, then what about discrimination? What if an employer doesn’t like Latinos or blacks? Then it’s going to cost him. With no minimum wage, he’ll have to pay the higher wage to the white worker, instead of the lower wage to the minority worker. He’ll lose money.

By contrast, his competitor in the same business who isn’t prejudiced, is happy to gain a competitive edge by hiring, and training, minority youth. That competitive edge might be just what it takes for him to survive in the dog-eat-dog world of competitive business, while his prejudiced competitor goes broke.

Unfair?

Is it unfair to the minority youth who’s paid less? Yes. As President John F. Kennedy said, “Life is unfair.” But what’s worse: a job that pays less but delivers crucial job experience and a slot on a resume — or having no job at all because the minimum wage prevented one from being hired? Obviously, working is better. And as mentioned earlier, a first, low-paying job rarely is the last job one will hold.

Williams wrote that it’s “offensive to the sensibilities of many people” that some workers are paid less just because of their race or color. But he then noted that in South Africa, which still suffered under the full force of apartheid in 1977, white racist unions supported minimum wage laws and “equal pay for equal work” laws for blacks precisely to freeze out the black workers.

And Williams pointed out that it has been unions in America that also have backed minimum-wage laws to keep minorities from competing with white workers. That hasn’t changed. AB 1439 is supported by the American Federation of State, County and Municipal Employees; the Laborers’ International Union of North America, Locals 777 & 792; and the National Association of Social Workers, California Chapter.

Back in 1977, Williams warned that increasing the minimum wage, which happened in 1978, would keep high unemployment for minority youth, discourage such youth from pernanently entering the work force by cutting off that “bottom rung” of the crucial employment ladder, create more dependency on government programs and “some of these youth will turn to various forms of anti-social behavior.”

Shortly after the minimum wage was hiked, despite Williams’ warning, the crack epidemic hit America’s inner-city youth. And even today, as noted earlier, black youth unemployment remains at 50 percent.

If AB 1439 is passed, it could raise that number even higher.