The Wolf administration claims that increasing the state-mandated minimum wage from $7.25 to $12 an hour — a nearly 66 percent increase — will generate $95 million for state tax coffers.
Now, that might be the case in some strange parallel universe in which the fundamental laws of economics are bent like light through a prism. But it’s not the case in real world.
Mandating higher wage floor by government fiat is nothing more than a state-imposed higher tax on labor. And the more you tax something, the less you get of it.
What’s more likely to happen — if adopted by the Pennsylvania Legislature (and that appears to be an unlikely outcome) — is that the entry-level jobs pool will shrink. It’s hardly a positive outcome for those seeking their first jobs, especially minorities.
But this outcome is par for the course for “progressives.”
Buttressing this point is a new study — by American Action Forum, a nonpartisan think tank — that predicts minimum wage hikes this year alone in 14 states will lead to the demise of 383,000 jobs. Ultimately, 2.6 million jobs will be lost, the think tank says.
As Investor’s Business Daily editorializes, “(T)hose who now push minimum wages as the answer to ‘wage inequality’ will instead (soon) push for more welfare — while vehemently denying that they had anything to do with killing millions of jobs.”
Then there’s the governor’s renewed push for a severance tax on the extraction of natural gas. The 6.5 percent impost he seeks in the next budget is higher than the tax he sought last year. Such a tax — if passed (and, again, that’s not likely) — would be the highest in the nation.
Supporters are quick to contend that Pennsylvania is the only state in the nation without such a tax. But it does impose an “impact” tax that local jurisdictions use (or at least they are supposed to use it) to pay for any deleterious effects from natural gas extraction.
The ups and downs of the commonwealth’s shale gas/oil industry are well documented. And it at least appears that the industry’s fortunes are beginning to recover. The last thing that’s needed is for “The State” to arbitrarily attempt to raise the cost of doing business here.
Market forces should determine the fate of such industry, not governments seeking to bail out their own decades of fiscal irresponsibility on the backs of those who actually produce something other than broken bureaucracies.
And here’s a most salient point regarding Gov. Wolf’s proposed FY 2017-18 budget, missed by most media:
Despite projected billions of dollars in savings through government “reforms,” spending will continue to increase.
As Allegheny Institute President Jake Haulk adroitly notes (in Policy Brief Vol. 17, No. 8):
“There is little question that the goal” (in budget austerity) “is to save as many taxpayer dollars as possible. But in this case, the savings proposed and hoped for are not being allowed to do what they should do, which is to lower actual spending.”
Further notes Haulk:
“(T)he government needs to look at major government expenditure drivers as well as laws that add costs to business and inhibit growth. Prevailing wage laws, teacher strikes, overly aggressive regulators, a history of kicking the pension crisis down the road, high taxes and a business climate that leads to very slow new business formation and expansion must all be addressed. Those rectifiable problems will, unless addressed forcefully and successfully, continue to produce perennial budget angst.”
Lawlessness soon could come back to slap the City of Pittsburgh and Butler and Westmoreland counties.
As reported by the Pittsburgh Business Times, an analysis by the Pennsylvania Senate Appropriations Committee says those jurisdictions’ defacto and infacto status as “sanctuaries” for illegal aliens shows they could lose millions of dollars in state subsidies if a proposed bill to punish them becomes law.
Pittsburgh could lose $9 million. Butler County could lose $25 million. Westmoreland County could lose $50 million. And the government subsidy holdbacks would skyrocket if federal penalties become law.
Taxpayers should take note: Thumbing one’s nose at the rule of law has costly consequences.
Colin McNickle is a senior fellow and media specialist at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).
