Have some fries with that executive order

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Because ObamaCare is such a complete failure, the president is at least slightly welcoming the latest distraction to keep the masses from noticing that problem. Protestors took to the streets demanding that the government not only increase the minimum wage, but essentially double it. Of course, while that might seem like a nice idea for people that are barely making it by with low wage jobs, it would not work out very well for them in the end.

Forbes explored this issue at length a while ago, but their findings remain just as true today. Slight increases in the minimum wage have been shown to cause job losses, as companies downsize to absorb the increased costs of their labor force. One thing that has changed is the effect of ObamaCare on the situation. Many employers are already looking at cutting hours of low wage workers to avoid the increased costs of benefits for employees.

Liberals are demonizing this action, and are still demanding higher wages, while ignoring what should be obvious. Increased costs must be paid one way or another, whether by cutting labor costs, increasing prices for consumers, or a combination of the two. Since the latter is a likely solution for many companies that employ low wage workers, that would mean the continuation of a vicious cycle for the very people that liberals would hope to help by increasing the minimum wage in the first place.

Low wage workers tend to use the goods and services of companies like fast food restaurants and WalMart, so even if their wages are increased, it probably will not help them very much in the end. A pay raise doesn’t do much good if the price of goods and services goes up, too.

The entire movement is backed by unions, and their primary interest is a battle for relevancy, since they have been suffering from radical declines in membership for years. They also don’t want the public to focus on the fact that the majority of low wage workers are not breadwinners in households. The image of families trying to make ends meet on just minimum wage incomes is disingenuous, because the majority of minimum wage jobs are held by teens and adults working for supplemental household income.

As for the politics on this issue, there is theoretically a way that Obama can yet again make an end run around Congress on this issue. Democrats like Keith Ellison (D-MN) are calling for the president to do just that - exercise executive power to force private companies entering into contracts with the Federal Government to increase their minimum wages.

The House Judiciary Committee has already held a hearing about Obama and his habit of stretching Article II of the Constitution, so if he would choose to do like Ellison and his colleagues in the Congressional Progressive Caucus want, that would certainly end up under scrutiny. But that would probably be the least of Obama’s problems.

We are in an age of increasing automation, with companies constantly searching for and finding ways to cut low wage labor costs through technology. Since younger people comprise one of the larger demographics that would certainly be affected by job losses due to a radical increase in the minimum wage, that might not be a choice that Obama would want to make right now. He needs those younger people to support him, and join ObamaCare. If he chooses to make an executive order that would place their employment options in jeopardy, Obama would also endanger his landmark law.

The other bit of misinformation that the protesters have been handing the public is the idea that the majority of jobs that have traditionally been considered “minimum wage” are actually still at that level. While there are still true minimum wage jobs still out there, many of the positions that people think are at that level really aren’t.

Many fast food chains do not even start workers at that level, and the higher wages that they offer are market driven. Only the analysts and economists are mentioning terms like “value of work”, and “value of labor.” The unions are trying to keep the public focused on phrases like “living wage”, while ignoring the fact that the majority of people working in low wage jobs aren’t the primary earners in their households.

As stated in Forbes:

The president declared that it was “wrong” that a family attempting to live on the minimum wage fall below the poverty line. However, just 11.3 percent of minimum wage workers live in a poor household. The average income of families with minimum wage workers is above $53,000, more than twice the poverty line for a family of four. Nearly two-thirds of recipients live in homes with incomes at least twice the poverty line. Just 16.8 percent of teen minimum wage workers live in homes below the poverty line.

Only .66 percent of full-time workers and 1.7 percent of full-time hourly wage employees earn the minimum. Just four percent of minimum wage earners are heads of households working full-time attempting to raise a family, less than the percentage for all workers.

According to a study in 2007, the Congressional Budget Office found that approximately 14.3 percent of minimum wage increases went to employees in poor families. Of course, the numbers could be a bit higher now, but that isn’t something that Obama would be wanting to point out. That would only prove that his own policies are not serving the poor.

So, progressives in Congress may continue to call for Obama to make a presidential order to radically increase the minimum wage, but unless the president wants to ignore all the numbers against the idea - economically and politically - it’s not likely that he’ll do it. If he would, it could prove to be yet another coffin nail for ObamaCare, and for Democrats in 2014 and beyond.

H/T: The Loud Talker


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