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SEIFFE:  WWJD?

Sunday, March 26, 2006

By Ralf Seiffe

Governor Blagojevich plans to beat Judy Baar Topinka by making the state’s minimum wage a central strategy.  By showing his “compassion,” he mimics national Democrats and takes a completely predictable and thoroughly liberal position. 

For conservatives, especially economic conservatives, the minimum wage is one of those defining issues like abortion and gun control. Republicans who voted for someone else in Tuesday’s primary wonder not "What Will Rod Pitch?" but "What Will Judy Do?" . . .   

Each time a proposal to increase the minimum wage rises from the swamp of economic compassion, both sides line up to support or denounce it.  Economists opine that an above-market, government-imposed wage will most hurt those it is designed to help.  On the other hand--a phrase indispensable to economic discussion--representatives of the poverty manufacturing industry fume that we “owe it” to our lowest paid workers. 

The problem for conservatives occurs when supporters of a wage increase paint objectors as callous.  Often, the conservative’s only option becomes “splitting the difference” with supporters, earning neither the gratitude of low-wage workers nor the respect of the base.  In the interest in avoiding that trick-box, here are some suggestions Ms. Topinka might consider to resist the candidate with the better hair and, at the same time, earn the support of the majority of Republicans who voted for someone other than her.  

1.  Illinois ’ wages would be rising naturally if it weren’t for the Illinois Democrats’ “Foreign Policy.”  The state has exceeded its constitutional limits by operating its own foreign policy in the sense that the state’s most powerful Democrat, Richie Daley, has declared Chicago a “ Sanctuary City ”.  Illegal immigrants understand this and move here knowing the local cops won’t bust them.  This creates a labor surplus in the most populous areas of the state which naturally depresses local labor rates.  This sanctuary concept directly hurts tradesmen who are usually Democrat stalwarts and is a real opportunity for Republicans to connect with them.  As a bonus, it also speaks to the immigration issue which is important to disappointed Republicans.  

2.  Increasing the minimum wage is a sign of economic distress.  Since the feds outlawed labor competition during the Great Depression, the minimum wage has increased twenty times.  Six Democrat presidents raised it 15 times and six Republican presidents raised it five times.  More interesting is when it went up: twice in the last two years of the Depression, twice more in the roiled economic times just after World War II and seven times during the economic malaise that was Ford and Carter.  In contrast, since Ronald Reagan ignited the economy 25 years ago, the Congress has raised it only four times.  The conclusion is that when the economy is strong, a minimum wage isn’t necessary but when it’s weak, politicians run to raise it.  Illinois has now slipped to a dismal 45th in job creation so, with regard to the minimum wage, Blago is acting in an utterly predictable manner.  The real problem is not that wages are too low; it’s that jobs are too scarce to drive up wages naturally.  

3.  This is Blago’s stealth tax increase.  The big winner is government because a minimum wage increase drives up other labor costs.  But, while prices adjust to reflect new wage levels and make purchasing power gains short-lived, government revenues permanently rise.  For example, If 3 million Illinois workers earn an extra $1.25 per hour as a consequence of the wage hike; Springfield will reap $225 million.  Want to see a bunch of senators jump? Put that in front of their noses.  The only problem is that Indiana , Missouri and Kentucky are ready to offer a better deal. This tautology leads to the next problem.  

4.  Despite the governor’s State of the State Address, outsiders see us as a high-cost state and will not locate here as long as that perception survives.  The last thing we need is to pile on even more state-mandated costs that make Illinois even more of an economic basket case. 

© 2006 Ralf Seiffe

Ralf Seiffe advises business start-ups and product launches from Chicago, Illinois and is a political analyst and columnist for the Illinois Leader and Illinois Review.