Who Loses from Minimum Wage Increases?

We have all heard the saying that "The Road to Hell is paved with good intentions." This saying could not be more true than when it comes to minimum wage. Liberals determine whether a policy is "good" entirely on what it should do, rather than what it actually does. Liberal policy makers decide they want to raise the incomes of individuals (salaries), when they should seek to increase the spending power of individuals (which would happen from increased productivity and the lower costs that follows).

Increasing the minimum wage, which is intended to raise the living standards of millions of Americans holding unskilled and entry level positions, finds itself playing a much different role. Instead of making individuals more financially well off, minimum wage increases always lead to massive layoffs. In fact, a new study from Ball State University suggests that the most recent minimum wage increase may have led to the elimination of 550,000 jobs. This level of lost jobs makes an eloquent case for opening up the possibility that such wage levels should be reconsidered.

Part-time workers monitored by the Bureau of Labor Statistics (from 1999 to 2009) found that raising the minimum wage to its current high of $7.25 during this recession, contributed to many businesses reducing the number of jobs they have available through attrition or to eliminate them entirely, according to Michael J. Hicks of Ball State's Center for Business and Economic Research (CBER).

The findings of the study did not end there:

• The youngest and least qualified Americans are those who suffer the most from minimum wage laws. Approximately 67 percent of teenagers and young adult minimum wage workers are members of households with incomes that are at least twice the poverty level (for example $44,000 for a family of four). This means that the vast majority of these jobs do not "make or break" a household's income, but are important ways for people to get the tools they need to get better jobs in the future. But if the job costs too much due to the government, the opportunity will never arrive.


• Adult workers working at minimum wage have limited skill. Raising the salary, in many cases, will force employers to consolidate many positions and eliminate many of these jobs. No one benefits from this kind of result.


• About two-thirds of all adult minimum wage workers have a high school degree or less. Frankly, the preparation of these workers are commiserate with their skill, training, and abilities.


• One benefit of a lower minimum wage is that it provides individuals the incenive to be more compeitive in the job market. Artificially high wages would reduce incentives to improve ones situation, would lead to higher prices for goods made, and leads to the elimination of many jobs. Minimum wage has many down sides, but not many causes for enthusiasm.

The study goes on to make several "real world" recommendations:

• The development of a "sub-minimum" wage that would lead to the creation of lower minimum wages for students and new hires would be assisted in keeping jobs.


• A student minimum wage would allow employers to hire seasonal workers without having to pay the full cost of adult employment.


• Introducing a tenure-scaled minimum wage would give employers an incentive to "take a chance" on less skilled and unskilled workers.

In addition, there are several aggressive steps that could be taken on the minimum wage front. The most important, in my opinion, is eliminating the current minimum wage entirely, but instead have he federal government mandate the states to have minimum wages of their own. This would allow states like Michigan, Ohio, and Nevada to be able to tackle their massive unemployment problem in creative ways that make sense to their particular circumstances. For example, they could have a different minimum wage for cities with disproportionately high unemployment, in order to make them more competitive.

Surveys show that unemployment is the most pressing issue facing voters today. Our current double digit unemployment puts us at a level we have not seen in a quarter of a century. The American people are looking for Congress to take serious steps to eliminate the barriers between people and jobs. Reforming minimum wage is an excellent place to start.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is also host of the Price of Business (M-F at 11 AM on CNN 650). Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

Does Obama want Harry Reid Out?

For years, conservatives have called on Sen. Harry Reid (D-NV) to resign as Senate Majority leader. This was due to his statement in 2007 that the war in Iraq was effectively "lost." He was wrong then both in principle and reality, but members of his own party embraced him warmly as they all collectively denounced our troop in ability and worked to undermine their morale. The warmth he shared among Congressional Democrats may now be lost since he has become the single most powerful obstruction to Barack Obama's agenda. Republican rants, tea party tirades, and conservative condemnations cannot compare to one man who sets the policy agenda in the US Senate. Reid, who is fighting for his political life in his reelection for 2010 is saying "no" to a second stimulus and is delaying the vote on Obama's health care agenda. This is not due to the economic consequences of these bills, but because of the political consequences as he faces a very difficult election in just over a year. The truth is, Nevada is not nearly as liberal as Harry Reid. In fact, he replaced one of the most conservative members of the Senate, Paul Laxalt, who was arguably Ronald Reagan's best friend and ally in the Legislative Branch.

Things are getting ugly on the left, many small, liberal bloggers have declared he needed to go. Now, the situation is worsening for Reid, as The DailyKos says "Harry Reid...for the good of Country...Please Resign!

The writing is written on the polls for Reid as well. The Las Vegas Sun reports "he still has some of the worst polling numbers in the country for a senatorial incumbent — a Mason-Dixon poll last month found that only 34 percent of the electorate had warm and fuzzy feelings about him, and 46 percent did not think too highly of him. Those are fatal numbers for most elected officials, especially one who has been around for four decades, which surely has caused a contagion of Reid fatigue." It goes on to point out that, in spite no "name brand" GOP candidates seems to be looking seriously at Reid's seat, "There are plenty of folks talking about and even campaigning for Reid’s seat on the GOP side. And even a no-name has a chance against someone whose approval numbers are upside down. Ex-Assemblywoman Sharron Angle may draw tittering from the political cognoscenti, but she is relentless, and with some outside funding, she almost cost Heller that congressional seat two cycles ago. And there will be plenty of outside funding this cycle as the national Republicans have Reid as their No. 1 target — and, I’d guess, their Nos. 2 through 10, too." Finally, it notes that "Except the national atmospherics could make somebodies out of nobodies pretty quickly if the economy does not improve, if health care reform implodes, if President Barack Obama’s numbers turn Reid-like. As the most powerful Democrat in the legislative branch, he would not just have to carry the national negatives if they exist; he would be the symbol of them — at thousands of gross rating points a week next summer."

Because of these realities, Reid will play it safe between now and November of 2010, making himself the single biggest obstruction to President Obama. Here are just a couple scenarios bouncing around.

If Reid resigns as Majority Leader, he can free up the Party to be as liberal as it wants and he can vote with the "conscious of a conservative" up to the end of next year. Problem is, much of the money he brings to his reelection is because he is Majority Leader. Furthermore, it is how he makes his case for reelection. "As Senate Majority Leader I have enormous influence on how states, like Nevada, benefit from Washington's policies." Difficult to make that case if you are no longer leader.

On the other hand, he doesn't resign and the Obama agenda goes down like the Titanic (an ever growing possibility), I could see the President and his minions pour money in to get a Primary opponent funded that will force Reid to resign to spend time on his reelection efforts.
Either way, Reid is in one ugly position.

Rumor has it, pressure is already being applied on Reid to resign within the government, in spite Congressional leaders defending him. I believe it will soon be revealed that Obama himself is applying that pressure. It will be interesting to see how this unfolds.

Kevin Price is Host of the Price of Business, the longest running show on AM 650 (M-F at 11 am) in Houston, Texas and on AOL Radio. His articles often appear in Chicago Sun Times, Reuters, USA Today, and other national media. Steve Moore of the Wall Street Journal calls Price the “best business talk show host in the country.” Find out why and visit his blog at www.BizPlusBlog.com and his show site at www.PriceofBusiness.com. You can also find Price on Strategy Room at FoxNews.com.

The Ten Fastest Growing Cities Might Surprise You

Lists are always interesting and two of my favorite areas are the growth or decline of cities. I love to know which ones are going which direction and why. CNNMoney has recently listed the ten fastest growing cities. Not surprisingly, the Sun Belt dominated the list. People are going to the places that create jobs and economic opportunity, most of those places are in the South.

That doesn't mean there wasn't surprises. I was shocked by how few of the names I was familiar. Most of these cities are smaller, but they usually are very near large cities and they are all growing very rapidly.

The top ten list:

1) New Orleans. One of the few cities I am familiar with is also the fastest growing. This is no mystery. Short of Hollywood, there is no other city more loved by the celebrity set and it has gotten enormous attention since it became a ghost town after Katrina. It is some what easy to be one of the fastest growing when you start with almost zero. It had a 13.8 percent increase in population in the last year.

2) Victorville, CA. Less than two hours from Los Angeles, this heavily Republican area has grown over 80 percent in the last decade. A favorite for movie production and growing in popularity because of the high cost of living in LA. It has experienced a 9.5 percent increase in the last year.

3) McKinney, TX. This Dallas suburb has enjoyed an 8 percent increase in the last year and is one of three Texas cities on the list. This is no surprise since Texas has been a bastion of economic growth and is a beacon to the rest of the country.

4) N. Las Vegas, NV. In spite stories that the West's city that never sleeps recent decline, North Las Vegas has exploded with a 7.4 percent increase in the last year.

5) Cary, NC. This Raleigh suburb that is in the heart of the deep South has seen a 7.3 percent annual increase.

6) Killeen, TX. The second of three Texas cities is little more than an hour from Austin, but otherwise is in the middle of no where. It has grown 6.5 percent.

7) Port St. Lucie, FL. In beautiful Southern Florida and off the Atlantic coast, Port St. Lucie has enjoyed a 6.3 percent growth.

8) Gilbert, AZ. I have a friend who lives in this growing suburb of Phoenix and he loves it. It has enjoyed a 5.8 percent increase.

9) Clarksville, TN. Just an hour Northwest of Nashville, Clarksville has been another beneficiary of southern prosperity. It has seen a 4.8 percent increase in growth.

10) Denton, TX. This Dallas suburb is the third and final Texas city and rounds off the list with a 4.7 percent increase in population growth.

The common characteristics of these cities is that they are all in the South and West and they are all in states with generally pro-growth economic policies. Also, with very rare exception, they are all heavily Republican (by the way, the cities that have lost the most residents are dominated by Democrats, but we will cover that on a future post).

People continually vote with their feet. Bad policies and bad politics simply drive people to places that are better.

According to recent surveys on marketing, most advertising attracts sellers (others who want you to buy more ads) and not buyers. Do you want to know why? Email info@HoustonBusinessShow.com and put "marketing audio" in the subject line and we will get it to you.

Kevin Price is Host of the Houston Business Show (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at HoustonBusinessShow.com. Visit the archive of past shows here.

Which States Are Hot? Which States Are Not? And Most Importantly, Why?

Recently, Bloomberg announced which states are hot -- in terms of population growth and decline -- and which states are not, but there is not a great deal of explanation as to why. The top 10 states for increasing population (between July 2006 and July 2006) are:

Arizona 213,311 3.6%

Nevada 83,228 3.5%

Idaho 37,098 2.6%

Georgia 231,388 2.5%

Texas 579,275 2.5%

Utah 59,729 2.4%

North Carolina 184,046 2.1%

Colorado 90,082 1.9%

Florida 321,697 1.8%

South Carolina 74,316 1.7%

There are several unique characteristics about these population shifts:

* They are often huge. Texas gained over 500,000 in one year! This is absolutely significant. This is not only due to the horrible affects of Katrina that hit in the summer of '05, but because of the huge number of businesses that have relocated to the state.

* All of these states lean Republican or are very Republican. Republican strategists lips salivate when they think of these population shifts to their state. This means more Congressional seats moving to their states and away (as you will see later) from Democrat states. However, they may be surprised by the long term results, as I will explain later.

* They are all in the West or (even more so) the South. This has been a trend that has persisted for decades and continues to be the case. Politically, the implications of this are significant. All of our Presidents since John F. Kennedy have been from Texas, California, Georgia, and Arkansas. The only exception to this trend was Gerald Ford, who was from Michigan. But remember, he was not elected.

What about states that have seen decline?

Connecticut 4,108 0.1%

Mississippi 2,044 0.1%

Ohio 7,321 0.1%

Massachusetts 3,826 0.1%

New York -9,538 0.0%

Michigan -5,190 -0.1%

District of Columbia -519 -0.1%

Rhode Island -5,969 -0.6%

Louisiana -219,563 -4.9%

So what can we observe about the decline of these states?

* They are in predominantly Democratic states. Five of these bottom 10 are strong Blue states. Only two are consistently Red (Louisiana and Mississippi) whose decline can be attributed to Katrina, which hit in the summer of 2005. This, again, makes Republicans excited and Democrats concerned, but the long term implications could prove different.

* They are on the East Coast and Midwest. With the exception of Louisiana and Mississippi, all of these are in the East Coast and Midwest, which have also suffered when it comes to political prestige.

What are the lessons learned?

I believe that the political and economic environment of many of these states have become so hostile to entrepreneurship and economic growth, people are voting with their feet in a quest to find better jobs and opportunities. Michigan has taken a pounding for decades (my family was among the "Michiganders" who flew South to flee the rust belt in the 1970s) and continues to face economic pressures due to unions that international competitors never have to encounter. New York and Connecticut are noted for their constant regulatory pressures they apply on business, forcing many to have little choice but to leave. The list goes on, people are leaving these states on the quest for economic freedom and they feel as though they are finding them in the above top ten states.

I believe Republicans, who appear to be the winners in these shifts, should be cautious in their enthusiasm. I remember when I worked as an aide for US Senator Gordon Humphrey (R-NH). That state had become extremely Republican by the 1980s and was enjoying growth as people fled the disastrous political and economic situation in Massachusetts just to the South. Eventually New Hampshire became Democratic as people moved who knew there were things wrong with their home state -- taxes, crime, etc. -- but didn't realize that the people they were voting for was the source of their problems. So once they moved to a new promise land, they brought the same terrible policies with them.

The future looks bright for Republican states on paper, but this will only be the case if new voters support the very policies that have made these states so attractive in the first place.