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Living Wages Kill Commerce

by on May 3, 2010

There wasn’t really a time when people were left to make a living and/or a living wage on their own, was there?  Such a reactionary approach to individual rights belongs in a quaint era when conglomerates were allowed to go bankrupt and people had to address their own health care needs.  Presumably, barbarians also roamed the Niagara Frontier building snow castles and eating the wings of chickens with their bare hands.

But maybe there was something charmingly worthwhile about figuring out how to earn a decent paycheck without political assistance.  Not only is it a rewarding incentive for good work, but the alternative doesn’t work here in reality.

The progressive attempt to enact a hyper-minimum wage only spurs economic retreat.  Such guarantees are only guaranteed to be counterproductive for a municipality that isn’t in a position to make demands.

Take the Canal Side project, which Buffalo’s Common Council naturally wants to stall with a “Community Benefits Agreement.”  It includes inflated worker payments among its other boring lefty demands:

Backers of a CBA want it to ensure that, among other things, small local businesses get a significant share of the project’s retail space; that the development use “green” technology; that it include local and minority hiring goals; and that Canal Side jobs pay a “living wage” higher than the state’s minimum wage.

The Council’s efforts to sabotage a retail ray of hope in an area that’s been dominated by a black hole for decades is sadly typical.  It’s reminiscent of the recent deal between the city and the Buffalo Olmsted Parks Conservancy to maintain the greens, during which the issue made a cameo:

An understanding that the conservancy would not have to pay seasonal or temporary employees a higher “living wage,” which the city typically requires of contractors.

The fact that the exemption was an exception defines the problem.  Workers who are valuable enough will make enough to pay for their needs; they’re either already at that level or will get there.  That’s even truer for those employed in private industries.  Distorting the market prices the area out of business while sticking taxpayers with the tab.

Further, it may shock Council members and their confused supporters to learn that nobody is entitled to make enough to break even at month’s end.  Workers toiling for low earnings are free to take on another job, subsist meagerly, request help from a church or the Salvation Army, find a roommate, rely upon a working spouse, live with family, or be a minor who doesn’t have to worry about rent and utilities yet.

Or, they could seek better work.  Some trades simply don’t generate enough value to employers to justify high wages.  Particularly, entry-level retail positions like the ones that would be available at the theoretical Canal Side shopping esplanade aren’t conducive to making it on one’s own.

Of course, a raise or promotion into management might catapult the register jockey into self-sufficiency.  But the initial salesclerk positions for enterprising young people will never even exist if the city insists on mid-level pay upfront.

The misconception that employees won’t be properly remunerated also lurks behind standard minimum wage increases.  Those who see corporations as parasites hold that unskilled and inexperienced workers would be compensated about nine dollars per week without government edicts.

But attempts to rip off working stiff would be unsuccessful even if there were no state or federal limits: a similar company down the street will exploit the exploitation and attract personnel who aren’t being financially respected at Company A.  Members of the workforce are free to market themselves as long as there are free markets.

Unfortunately, government meddling of all types serves as the equivalent of lead life preservers to those treading water.  Consider how they pay their own: every day brings yet more stories of woefully overpaid state workers or woefully underfunded state pensions.  If governments set out to compensate their minions in a way to make private sector workers jealous, they succeeded.

With that in mind, we must let everyone begin on the lowest rung.  As with Buffalo itself, workers must prove themselves.  Thankfully, prospects for both the area and jobseekers would improve after a slight probationary period: the retail presence and wages have every chance to grow concurrently along the Canal as long as everyone involved is willing to engage in the equivalent of entry-level work.

On the other hand, the Council’s wage interdiction threatens to stop development in the empty plot phase.  It’s unfortunately not hard to understand why fat paychecks are so scarce considering the stifling economic circumstances that have enveloped the area for decades.  Neither the legendarily large tax burden nor the similarly huge rulebook are helping; insisting upon living wages is just one more maddening example of aid that should be refused.

The worst way to compensate for the damage inflicted by untold unreasonable regulations would be another regulation.  Making companies pay artificially high wages now will prevent genuinely good jobs from being created at any future point.

The level of base pay sought will either shrink profits or eliminate them altogether to the point of being prohibitive.  But at least the remaining positions will offer a “living wage,” assuming the highly dubious notion there are any.

A decent hourly rate is a foregone conclusion for proficient staff, unless one happens to subscribe to the rather East German notion that businesses are run by cigar-chomping, cognac-sniffing fat cats who hang out on Wall Street dressed like Rich Uncle Pennybags or Mr. Peanut.

Hard and smart work ensures meager wages are merely a temporary condition.  But some politicians are attempting to erect a payment floor that stands on stilts.  If they’re successful on the Canal Side, vacant spaces will continue to accompany the city’s vacant storefronts.

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One Comment
  1. All this for a glorified Dick’s Sporting Goods store?
    CBA is the antithesis to economic prosperity.

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