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POLITICS
'Living Wage' Must Die
Soon enough, no sane small business will want to operate in New Haven
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Business New Haven
10/18/1999
By: Laurence D. Cohen
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The Cohen Communications Inc. annual company picnic is a splendid affair. Each summer I lay out a blanket, chill the champagne, put out the cocktail shrimp, the cheese, the crackers and offer up a stirring speech extolling the virtues of creativity and hard work.
Then, I fold up the blanket, toss out the empty champagne bottle and the shrimp tails and trudge back up the stairs to do God's work.
What's missing from the picnic is employees. My annual company bash is a lonely vigil.
The problem seems to be that no one wants to work for the minimum wage. Standard pay for my theoretical employees (cracker-jack writers and editors, clever media-relations types, and artistic graphic designers) is $5.65 per hour, plus the occasional free Diet Coke from the company refrigerator.
No takers.
Since I have no Human Resources Department, I have to take advice wherever I can get it. U.S. Rep. Rosa DeLauro (D-3), in a recent sermon on the minimum wage, suggested that "The minimum wage is a barometer of how we, as a people, value a person's labor and how we value their families."
Aha! The very next job applicant who walked in the door got the full treatment. I asked about her spouse, her kids, and expressed gratitude on behalf of "the people" for the stability and prosperity of her model family.
She expressed considerable interest in working for me.
On behalf of "the people," I then told my applicant that everyone was very busy taking their kids to soccer games and that the only person who had the time or inclination to "value" her labor was me. I offered her the minimum wage.
She turned me down.
The Gods were not angry. "The people" felt neither vindicated not disappointed. It was another private-market transaction that resulted in my job applicant moving on to a job that paid more than the minimum wage; and the Cohen Communications treasury was saved from a financial assault that it could little withstand.
Connecticut's minimum wage will rise to $6.15 per hour next year, which will not only dampen my enthusiasm for hiring, but will probably reduce the likelihood that I will hire a band to perform at the company picnic (it's hard to dance with yourself).
Over time, as competitors outbid me for the best and brightest, I will be reduced to living off bugs and berries and the 16 cents per week I receive from the plutocrats at Business New Haven.
It's my fault. I could cut back on the shrimp at the company picnic. I could dump the computers, stop buying new software, and return to the inexpensive fundamentals of an electric typewriter. I could plunge into the market with a fistful of dollars, to attract the ungrateful dilettantes who think they deserve more than the minimum wage.
I'm one of the lucky ones. For employers who attract low-wage employees, for employers who can make do with low-skill employees, the minimum wage is a true deterrent - a financial penalty set not by the market, but by politicians who can get away with flowery rhetoric about "valuing" other people's families.
As the federal minimum wage continues to rise, as Connecticut's minimum wage continues to rise even higher, as Connecticut's "prevailing wage" law for construction artificially inflates the cost of public-works projects, as New Haven rams through "living wage" legislation that will discourage any sane small business from operating within its borders, as the General Assembly approves special wage rates for janitors and food-service workers, we drift further and further from the logic, efficiency and, yes, justice of a market system that is the envy of the world.
There is a certain insane logic to the minimum wage and living-wage fever in Connecticut. For the most part, we are a well-scrubbed, suburban population, and each artificial hike in the entry-level wage guarantees a bit of extra spending money for the middle-class teenagers who sell us sneakers in the shopping malls. The poorest and least-skilled watch as low-tech manufacturing and small businesses escape from the cities and from the state, taking jobs and opportunities with them.
At best, these artificial intrusions in the labor market are a fuzzy and ill-defined welfare system, paid for - or escaped from - by the very businesses most needed to provide a first step up the economic ladder.
Laurence D. Cohen is senior fellow of the Yankee Institute for Public Policy.
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