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Legislators would be wise to prevent patchwork minimum wage laws

Legislators would be wise to prevent patchwork minimum wage laws

Fred Birnbaum
February 10, 2016

Some in Idaho want to give cities and counties the authority to enact their own minimum wage ordinances. These same people argue that conservatives who oppose this “local control” concept are hypocrites. After all, aren’t conservatives in favor of local control?

I must point out that proponents of limited government argue for policies that promote individual liberty and entrepreneurialism regardless of where they appear. My case against the development of such patchwork policies, though, does not rest on this principle alone.

The U.S. Constitution was written to define the relationship between the federal government and the states, as well as between individuals and government. Individual liberty was and is meant to trump government power. With that framework, a question of limits to government power arises: Does the proper role of a government of a free people, at any level, include dictating the wages between an employer and employee?

I would advance that, no, the proper role of government is not to dictate wages, nor salaries or benefits for that matter. Such decisions are between an employer and an employee. For government to interfere is a violation of private contracts.

Yes, we have a federal minimum wage law and some states use it as a base level to build upon. However, for those who really believe in local control, the logical extension is not to push a bad policy further down the political chain. Rather it is to push for the ultimate in local control, which is the freedom between an employee and an employer to determine what is an acceptable wage.

Every policy has unintended consequences, including legally-mandated minimum-wage policies. Worse still, higher minimum-wage policies at the city and county level present an additional problem that often does not come into play when such policies are compared across states.

If you are a local entrepreneur who operates a service business and you have invested capital in your business, a local wage ordinance may put you at a competitive disadvantage with an adjoining town. Local businesses designed to serve local populations are far more likely to be impacted by local ordinances than competition between states.

Do we really want an Idaho with a patchwork of laws regarding wages? Many believe raising the minimum wage by way of government decree is a path to prosperity.  Frankly, they are barking up the wrong tree.

A society improves its standard of living through productive investment which reduces the costs of various goods relative to the price of labor. Simply forcing general wages up by government dictate will not improve the standard of living in the long term as the prices of goods will simply rise too.

A final point.

Back in the 1970’s Idaho’s per capita personal income was more than 90 percent of the national average. That was a time when resource jobs in timber and mining were plentiful. If folks in the progressive camp really cared about Idahoans' wages they would not settle for trying to squeeze a couple of dollars per hour more from small, and often struggling, businesses. They would create the conditions for a return of resource-based industries to Idaho.

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