The “Living Wage” will not help California

Lets get real. The only way a person can move themselves out of poverty is by hard work, self-reliance, experience, education and learning new skills. If you want to have a career as a cashier in a fast food joint—that is what you could have—including the low pay, bad hours and few or any benefits, that could be yours. The choice is yours, not your neighbors, friends or relatives. You choose how you want to live. Government spent trillions on the War on Poverty, and just made more poverty stricken people.

Government education is geared to the lowest common denominator—that is the purpose of Common Core, to solidify that as the standard of education—which is why California and other States will not have standardized test next year based on Common Core—it would be embarrassing.

“This awareness is in direct contrast to many California newspaper reports that a recent study by UC Berkeley “counters the expected “job-killer arguments” with an analysis of past wage boosts showing that costs are absorbed through reduced worker turnover and improved worker performance.”

However, methodological errors have been found in that study such as: “data often fail to justify DLR’s exclusion of alternate non-border counties (or regions) as controls”,  the “findings are quite sensitive to the number of leads and lags of the minimum wage included in their empirical model” and the “selection of matching counties often produces matched pairs that are quite dissimilar across an important set of observables. “

It should also be noted that another study by UC Irvine concluded the opposite of the UC Berkeley study, showing “a hike in the minimum wage did hurt the job chances of low-wage workers.”

minimum wage

The “living Wage” will not help California

Original reporting by Anthony Marcolongo, by Californiality Staff, 12/11/14

In 1968, American economist Milton Friedman discussed the idea of a negative income tax, where those earning below a certain predetermined threshold would receive supplementary income instead of paying taxes. Friedman suggested his plan could eliminate the 72 percent of the welfare budget spent on administration. But nothing ever came to fruition.

Now here we are in year 2015 and still poverty plagues our state. What are the answers to eliminating impoverishment? Although California already signed into law an increase in the minimum wage from $8 an hour to $10 an hour, making it the “nation’s highest” minimum wage, …the best idea that California legislators can come up with seems to be to simply increase the minimum wage even higher – beyond the highest in the nation. As one supporter of this new plan put it…“Continuing to boost the wage floor for California’s workers should be a key component of our economic recovery plan”.

California Senator Mark Leno has proposed a bill recently that would raise the minimum wage to $13 an hour. The 10$ an hour minimum wage law placed California in the range of “about the same

percentage as in European countries with a statutory minimum wage today”. Making California equal the most socialist economies in the Europe.

The new $13 an hour minimum wage would place California beyond the average level of European socialist economies and closest to the most socialist economies in the entire world,the northern European nations or closer to the level of minimum wage in “Nordic countries today”.

The point of this bill, according the author Senator Leno, is to raise Californians above the Federal poverty level“Low, stagnant wages have forced many hard-working California families to get by with paychecks that leave them below the poverty level,”. The senator has also supported the concept that this act will improve the economy, directly stating that this plan to raise the minimum wage to levels higher than ever seen before in recent history will “stimulate economic growth”.

Instead of providing a traditional social net, such as unemployment payments, food stamps, housing allowances, and general financial assistance, California could ensure every citizen is given income at accepted poverty levels. This concept has been batted around for a long time, it is called in popular political speak a “Living Wage.” The idea of a Living Wage though has been especially popular around California over the last year. Given the cost of living in California, such a reasonable income could provide, at the minimum, a comfortable bare bones existence.

The program is intended to wipe out poverty…“give low-income workers a fighting chance to end their dependence on public assistance” …and at the same time replace existing ineffective government programs, helping to reduce government bureaucracy…“It is time to accelerate our efforts to increase the minimum wage”.

The idea appears to have merit but there are a lot of pitfalls as well. For example there is no consensus among the experts, and the media on what “exactly” will be the reaction to an increase in the minimum wage. For example one of the most distinguished national think tanks in America concluded that: “Economists continue to debate the extent to which minimum-wage laws reduce poverty, income inequality and/or overall employment”

This awareness is in direct contrast to many California newspaper reports that a recent study by UC Berkeley “counters the expected “job-killer arguments” with an analysis of past wage boosts showing that costs are absorbed through reduced worker turnover and improved worker performance.”

However, methodological errors have been found in that study such as: “data often fail to justify DLR’s exclusion of alternate non-border counties (or regions) as controls”,  the “findings are quite sensitive to the number of leads and lags of the minimum wage included in their empirical model” and the “selection of matching counties often produces matched pairs that are quite dissimilar across an important set of observables. “

It should also be noted that another study by UC Irvine concluded the opposite of the UC Berkeley study, showing “a hike in the minimum wage did hurt the job chances of low-wage workers.”

The question becomes – which UC study should Californians believe?

Opponents of the idea of a “living wage” make the point that the effects on potential productivity would be nebulous at best. Also another question is how much of this money would some people spend in foreign countries, thus providing little to no benefit to California’s own economy? Another nagging problem is the fact that there is no historical precedent for such a plan, providing little experience to draw from, especially on this scale.

Additional concerns are the tendency for a system like this to have no real minimum. People will always want more and politicians will always find it good for their careers to give it to them.

Proponents of the living wage argument say that not only would the program end poverty, high school completion quotas would increase dramatically because there would be less pressure on children to work to support their families. It is believed that teenagers would work less because they wouldn’t be under as much pressure to support their families, which would also result in more teenagers graduating…thereby improving the quality of families in California.

Another benefit presented by one of the founders of the proposal, is to insist that a living wage would boost California’s continuing cultural progress along the lines of providing dignity and security to the poor, “it is the right thing to do for our communities and families…[who] struggle every day just to pay their utility bills and put food on the table.”

Government officials continue to believe, as they have throughout history of this state, that conduct can be somehow legislated, directly, or as in this case, indirectly. But this writer presents other unaddressed issues.

The program cannot end poverty, as claimed. It can only minimize poverty, given that some people lack any discernible incentive to improve their lot in life; others simply do not have the emotional or mental capacity to do so; and still others, by nature, are victims of their times and totally unable to escape impoverishment mentalities. So, poverty can never be totally eliminated, as proponents of the bill would have us believe. A recent review of scientific literature on the subject concluded: “There is no consensus among economists regarding the effects of minimum wage increases on poverty.”

Further, the proposed “Living Wage” will not, and cannot stem the flow of drug use in this state. In fact, it may very well stimulate drug use to levels heretofore unseen in California. Also, there will be the effects of corporate greed upon recipients of the benefit. The trend can be predicted when past performance of business versus wage increases is studied. Every wage increase in this state has always been met with increased pricing from business. Although not well studied, what literature on the subject that does exist has concluded“the limited price data suggest that, if anything, prices rise after a minimum wage increase”.

This program will have the result of increases in electric and gas power prices, water usage prices, food prices, telephone and television rate increases, and much much more, thereby negating the advantages sought and simply raising the poverty standards a higher level. And last, but not least, let us not overlook the greed of the federal and state taxing agencies. Does anyone actually believe they will stand by and watch as this money flows outward without developing the aspiration to levy their ‘fair share’ of it?

It’s a conundrum, folks. I believe the only relief from poverty comes via education of the poor. Enriched minds strive for better status in a community. One does not eliminate poverty, one escapes it.

About Stephen Frank

Stephen Frank is the publisher and editor of California Political News and Views. He speaks all over California and appears as a guest on several radio shows each week. He has also served as a guest host on radio talk shows. He is a fulltime political consultant.

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