Let businesses set their own wages
Published 8:21 am Thursday, April 14, 2016
Fifteen dollars an hour sounds good for those making minimum wage. That is the amount voted in as a new government mandate in the states of California and New York.
Some believe it sounds fair to require a livable wage, and, in fairness, it is a reasonable issue to be debated for those on a government payroll.
For the private sector, however, there should be no consideration. It is not the responsibility of government at any level to establish salary levels. Employment compensation is the responsibility of the employers who best understand the financial needs of their business.
Government mandates have no understanding of market pressure on prices or operating margins.
The government has no ability to appreciate differing business marketing strategies between high volume/low markup with limited service and low volume/high markup and quality service, nor should they try. It is the capital and sweat equity that an individual puts into a business that should guide the decisions of success or failure, not mandates.
Why should we, as Virginians, have any concern for what the state of California and New York decide? Particularly when some actually believe it might be a boost to Virginia’s economic development program, who could use it as a selling tool for Virginia to attract business from those states.
Let me address how it will affect Virginia.
1. What those states have done will embolden activists in Virginia to push for a similar mandate in Virginia.
2. Products that are produced in California will rise in price as salaries are inflated. While a limited number of full-time employees are currently at minimum wage, raising the least productive employees’ wages will force increases for other, more productive employees.
3. It will drive up inflation, increasing the cost of things that your family uses. Some companies may vary retail prices, but others will try to maintain uniform pricing. This will effectively give argument for additional wage increases.
4. Rising business costs of larger companies will encourage greater dependence on lower-quality products and products produced overseas, increasing our national trade deficit.
5. Higher operational costs will drive more businesses to operate outside the legitimate economy and turn to the underground economy, which pays workers with cash. Doing this increases the probability that they are reducing federal taxes by underreporting profits and increasing our deficit spending on the national level.
The best way to a good wage is to learn a skill that is in demand in today’s economy. Virginia has many skilled workers eligible to retire now and will in the next few years, yet we do not have replacements trained who can take those jobs.
Frank Ruff, a Republican, represents Lunenburg County in the Virginia Senate. His email address is Sen.Ruff@verizon.net.