Thursday, November 14, 2013

Raise the minimum wage for Idaho



I support raising the minimum wage for Idaho.  There is a petition going around to get this proposition on the ballot in the 2014 elections.  You can read about it at raiseidaho.org. The minimum wage would raise to $9.80 by 2017.  The first raise would take place on January 1st 2015 to $8.10. 

Why am I supporting raising the minimum wage? Those who know me know that there is a sweet spot in me for market economics.  As most libertarians would counter, there is no reason for the government to distort pure market mechanisms.  The market will dictate the worth of wages.  While this is generally true, there are some reasons why I am supporting this measure to increase the minimum wage in Idaho.

1. This is not a living wage.  Despite the language of the petition which supports a living wage, $9.80 an hour in 2017 will not be a living wage.  While I support an increase in the minimum wage, I do not support a living wage (around $15 dollars an hour).  Having a minimum wage below the living wage line is a powerful incentive for people to take risks, start businesses, go to college and increase their productivity.  The increase in minimum wage will be a boon for millions of workers, without decreasing incentives for young people to go to college or start their own businesses.  This is a good middle of the road policy.

2. Some might argue that increasing the minimum wage will result in higher burdens on employers and a reduction in jobs.  To a certain extent this is true, however there are several powerful counter arguments.  First, the increase does not take place until 2015 which will give the economy time to continue to grow and recover.  Even with the federal governments best attempts at wrecking the economy it continues to impress.  The stock market continues to climb, oil production is at an 24 year high.  The second reason is that an increase in minimum wage usually causes an increase in GDP growth.  Those earning minimum wage are not the ones saving their money, they usually spend every penny.  An increase in minimum wage will increase domestic demand.  This will lower the burden on employers. Given the fact that Idaho has traditionally had a lower unemployment rate than the nation, raising the minimum wage is the right policy at the right time.

Many will argue that increasing the minimum wage will not improve the underlying structure of the economy needed for growth, and they are most likely right. Increasing the minimum wage does not reduce the need for more pro growth reforms in Idaho.  Educational reforms will still need to be implemented on all levels.  Idaho schools are not among the top in the nation and Idaho lacks a premier university (the Boise State football team does not count) as well as a medical school.  This will increase the productivity of the labor force (it works for Seattle).  Investments in infrastructure will need to be made as well as.  While Idaho boasts of the lowest tax burden in the US, it also has the highest percentage of workers working at or under the federal minimum wage.  While raising the minimum wage will not solely raise the Idaho economy, it will raise the quality of life for those who need it the most. 

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