Last month, in this year’s State
of the Union address, Pres. Barack Obama
exhorted that American subnational governments (that had not yet done so) raise
their minimum wage laws to $10.10 an hour. Of course, doing this, or even
having such a notion as a minimum wage, betrays profound ignorance of
economics. In a market system with provisions against monopoly, the market sets
wages in proportion to the benefits they provide society through the activity being
compensated. Artificially
inflating wages only serves to channel resources inappropriately, removing them
from more productive uses that if they instead went to those uses then would
increase overall societal wealth, including a rise in the absolute living standards
of the lowest wage earners (of which 2.9 percent of all workers make the
minimum wage, of which two-thirds are part-timers, most of whom are not sole
breadwinners, and half are 24 or younger).
This also promotes
increased unemployment, as the pot of money (which now will grow more
slowly because of the misallocation) is allowed to be divided among fewer
individuals, and fewer jobs holds down the rising of levels for everybody.
While some analysts, who no doubt believe that money grows on trees and in the
Tooth Fairy who brings it from nowhere, argue that this increases purchasing
power of the recipients which should promote economic growth, they either are
too ignorant to grasp or deliberately ignore that the money is redistributed from
elsewhere, and from its more productive uses. It’s nothing more than wealth redistribution
for unjustifiable reasons, and an immoral act that deprives those the least
able (if willing) to contribute to society by erasing their means by which to
achieve this.
Except that Obama and his ilk think
there is such a permissible reason. They have faith in the pernicious idea that
it’s not maximizing absolute living standards that government should promote,
but relative living standards, or what they term as narrowing “income
inequality.” They hold the curious view that something structurally wrong
exists in the free market that makes the holders of greater wealth “lucky”
compared to those that don’t, and in fact promote the bizarre notion that the “lucky”
are able to corrupt the system to perpetuate the differences. This flight from reality
would be laughable if its execution in government policy didn’t compromise
property rights and visit misery onto those of the lowest wealth strata who
would benefit most relatively from economic growth.
Unfortunately, that also seems to
be the thinking of Centenary President David Rowe, who declared
after the speech that he was raising the wages of roughly 25 employees up to
that level. He also got, although described as eliciting “no pushback” but
which possibly might have involved threats about future deals if not enacted
immediately, the two private sector service vendors on campus to do the
same for hundreds of more employees. That boost might have been legitimate had
Centenary had complaints about those services that it felt could be addressed
by paying higher wages to get higher quality workers, but there’s no indication
that this was an issue.
Despite the ultimate effect of his
action, Rowe probably by this time in his career knows his organization doesn’t
operate in a vacuum. Assuming each Centenary employee gets an average $1.50 bump
(ignoring another deleterious effect of the minimum wage, additionally
inflating wages of employees currently just above it in order to prevent loss
of morale in their realizing others in far less contributory jobs now are making
almost the same that they do) and they are all full-time, that’s an extra
$75,000 a year. Even though Centenary had severe
financial problems recently that required considerable downscaling of both
sports programs and academics, given it collected in fiscal
year 2013 revenues of around $45 million a year and sits on $51 million in net
assets ($28 million current), and with a $125 million endowment it probably can
eat that without passing it along to families.
Whether it can do so when
contracts get renegotiated with the providers is another matter. And when a
year’s worth of full course load tuition alone (without academic, room, board,
and parking) costs almost
$31,000 annually, current and prospective students and their families
should not enjoy the fact that they may be asked to pay for affectation, not
better education.
Because in the final analysis,
that’s the signal that Centenary sends to the world by an action like this.
This denotes that Centenary is unserious about education by its willingness to
follow faddishness, despite and in spite of faculty efforts to try to provide a quality
educational experience. When the administration seeks correctness on the basis
of half-baked understandings, it invariably colors the image of the school’s
academics, and as a result those considering availing themselves of that
service must question the commitment of the school to quality education.
Rowe’s decision might have
grabbed headlines, but its consequences of potentially offloading costs onto
consumers and/or threatening further deterioration of the school’s finances, as
well as its tacit endorsement of policy the immorality of which is defined by
its hurting society more than helping, should make students, their families,
and donors reevaluate their attachments to the school as long as this kind of
leadership persists.
1 comment:
If the perils of raising the minimum wage are true as you say, then why hasn't raising the minimum wage in the past destroyed America-As-We-Know-It?
That's easy - it's because raising the minimum wage has no deleterious effect on the economy. It actually helps grow the economy, because workers have more money to spend on things; i.e., demand is increased, which always grows the economy, 100% of the time.
Assertions such as yours, as stupefyingly condescending and obnoxiously sanctimonious as they are, could only come from someone with a profound ignorance of economics, if you've got to use such rambling discourse to mask your contempt for the working poor.
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