Email correspondent John Vairo responded to the Allegheny Institute’s recent Policy Brief (Vol. 23, No. 24) and companion commentary on the damaging effects of Pennsylvania raising its minimum wage to $15 an hour with this simple retort:
“Nonsense.”
“How so?” I prodded him in response.
Herewith, that response:
“(T)there are many positives to increasing the minimum wage. Lifting people out of poverty, increasing tax revenue. There are also the downsides as you mentioned such as small firms not being able to afford to pay the new minimum wage and perhaps being forced to close down.
“If you live near me in Bucks County, near New Hope, you cannot get anyone to show up to do the most basic menial job for under $15 an hour. One of my friend’s daughters, attending Drexel University, is working a summer job in Newtown at a rehab facility and is getting paid $70 an hour for the summer. Yikes!! First-year college student.
“The real problem with Pennsylvania is the segregation of communities regarding education and wealth. If you live in the suburbs of Philadelphia and Pittsburgh, you are for the most part living a very good lifestyle with a lot of optimism for the future.
“If you are living in many of the rural counties in Pennsylvania, you are basically poor and don’t see much opportunity. This seems to be a common problem for much of the U.S. — two separate worlds.
“Raising the minimum wage may not be the best method of trying to pull people up from poverty, but at least it is an effort to try to do something.
“Personally, I would rather pay 10 percent more for a product and or service and see poorer people have a chance to get paid more, having grown up in a poor environment in upstate New York many years ago.
“I know what it is like to make a low minimum wage and not see any hope for the future. I was lucky and made it to college and was able to make money. I would like to see other people have the same chance.”
But Jake Haulk, president-emeritus of the Allegheny Institute – the lead researcher/writer of the June white paper – sees the matter differently, of course.
“(Vairo) inadvertently provides the answer to his own suggestion,” the Ph.D. economist notes. “He can afford to pay 10 percent more but in the counties with far lower wealth and income, the folks cannot afford to pay more for the products of low-wage businesses.
“Eliminating or reducing income and wealth disparities across counties and communities within counties is a completely different level and type of problem. It is the same for states.
“Killing jobs by forcing far above local market wages is a prescription for disaster– more unemployment, more poverty and welfare recipients. The very essence of unintended consequences.
“Should the state government force companies to relocate from well-off counties to poor counties to boost wealth and incomes? Try that and see what happens.
“And aren’t many state functions such as education already redistributing income within the state?
“Being soft-hearted and wanting to help is fine. But interfering with market forces is not the answer. Attracting industries and companies with large markets and high value-added jobs is the far better way.
“The problem is that Pennsylvania is not an attractive place for out-of- state or out-of-country businesses because of its policies that are excessively pro-union and are too heavily in thrall to public sector unions.
“Trying to solve the income disparity problem with a much higher state minimum wage is a counterproductive solution and is typical Pennsylvania resistance to dealing with its fundamental economic issues.”
Thanks for the discussion, gentlemen.
Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).
