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The market, not government, is raising the minimum wage

The market, not government, is raising the minimum wage

Dustin Hurst
July 6, 2015
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July 6, 2015

Pop quiz: Who has raised wages for more Idaho workers: progressive activist Anne Nesse of Coeur d’Alene, or businessman Scott Moscrip, owner of Internet Truck Stop?

Answer: Moscrip.

Last week, Moscrip announced his business would raise wages for its employees to at least $15 an hour for the next two years. After that, the company will bump pay to $20 an hour for those same workers.

Moscrip told the local paper more than 100 employees should see wage hikes.

That’s far more than Nesse, who hasn’t persuaded state lawmakers or her hometown, Coeur d’Alene, to impose higher wages across the board.

Let’s be clear: This isn’t a slight of Nesse’s efforts. She’s wrong on this issue, but I certainly admire her passion.

I highly doubt many residents want her Idaho, though.

See, Moscrip told the paper the company will reward workers who’ve helped bring the company to a point where it could afford the higher pay. “We want to reward the folks who made us as successful as we are,” he said.

While big government apologists will use Moscrip’s move to push for more government wage controls, the public needs the truth: wage growth is the result of successful businesses.

Internet Truck Stop can afford the higher pay now, so it raised wages. Good for Moscrip and his company. Could his business have survived higher minimum wages five years ago during the financial meltdown? Maybe. But maybe not.

Government-imposed wages limit flexibility and kill opportunity, especially for minorities and the young. A wage floor makes it harder for small businesses, mom-and-pop shops and services, and startups to compete with the big guys.

Sometimes social movements creates upward pressure on wages. Earlier this year, Walmart announced its plans to raise starting worker pay to $9 an hour. Days later, a slew of companies followed suit, including retailers TJ Maxx and Target.

Those pay levels do not appease hardline progressive activists who demand $15 an hour. What they fail to understand is that long term wage growth is a function of productive investment, productivity growth, and yes falling real prices.  What does $15 an hour do if a hamburger costs $10?

Think I’m wrong? Look at Puerto Rico, the U.S. commonwealth forced to adhere to America’s $7.25 per hour minimum wage. That rate is 77 percent of the average median hourly wage on the island. Conversely, $7.25 an hour is less than half of the median wage in the states. That’s a problem.

Puerto Rico’s labor force participation rate -- the number of people working and contributing to the economy -- is 32 percent lower than the tumbling U.S. average. Plus, non-farm employment has grown a mere 7 percent through the past 25 years -- opposite 30 percent growth in America.

We should applaud Moscrip and crew for raising their wages, but government should avoid placing that burden on all businesses. America’s people are as productive as the government allows them to be; why not maximize human potential?

Otherwise, we can model America after Puerto Rico, which is struggling under debt, but at least the few people who work have high wages, right?


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