WILL THE LAST GUY IN ILLINOIS PLEASE TURN OUT THE LIGHTS? THANK YOU.

2/6/13

Why doesn’t Illinois Governor Pat Quinn (no relation) just get up and announce that he’d like all businesses to leave the state of Illinois?  Between the tax increases he has sought and won, the state’s $95 billion plus unfunded pension liability, which is simply a deferred tax increase, and his newly proposed increase in the minimum wage, why would anyone want to run a business in the Land of Lincoln?

Mr. Quinn (no relation)  , of course, tells us that his desire to increase the current $8.25 minimum wage to $10.00 over the next four years is simply a matter of “fairness,” “justice,” or “compassion,” but it is none of those three.   Simply put, it is not fair, just, or compassionate for a person to have no job rather than a job that pays only $8.25 per hour.   Raising the minimum wage costs jobs, and primarily the jobs of people at the lowest rung of the earnings ladder, those who can least afford to lose their jobs.  Mr. Quinn (no relation) says that no one who works 40 hours a week should live in poverty; one can only conclude that the Governor would rather have people not work at all and live in even deeper poverty.

There are studies on both sides of the question of whether raising the minimum wage causes job loss and/or where in the economic hierarchy those losses occur.   Most studies conclude that increasing the minimum costs jobs, mostly at the lowest levels of the wage scale and emanating upward with decreasing concentric force.   Admittedly, though, there are a few studies that conclude that raising minimum wage has no such desultory impact on job creation.  I seem to recall one such study of employment patterns in (I think.) Pennsylvania and New Jersey a few years ago that came to such a conclusion.  It was widely trumpeted by labor unions and other advocates of increasing minimum wages, probably because it ran counter to the overwhelming majority of the work that has been done on this topic.   One seldom hears much of that study any more.

But forget the studies, both the majority that support my argument and the minority that don’t.   As I’ve told my students, if you can tell me who paid for a particular study, I can tell you its conclusion without even having to read it.   Just use your common sense.  If the law says you have to pay someone $10 per hour and s/he can’t generate at least $10 per hour for you, you won’t hire him or her or, if s/he is already working for you, you will let him or her go, or at least not add to your pool of minimum wage workers, thus depriving such workers of the opportunity to gain the work skills, or just the good work habits, necessary to increase their earnings potential.  Or you’ll simply leave the state and take your business with you, depriving ALL local wage earners, not just minimum wage earners, of employment.   What good does that do anybody?  

Governor Quinn has spent his entire lifetime on or very close to the public payroll.  So maybe one can understand his idea that businesses exist to finance that payroll and to provide jobs at wages the politicians, who have none of their own skin in the game, deem “adequate.”   But businesses exist not to do the politicians’ bidding; they exist, at their most fundamental level, to increase the wealth of their owners.   While that sounds cold and cruel, think about it.  If people did not see the opportunity to get rich, or at least to make a decent living, in their own businesses, why would anyone bother to start a business?   Why not just go to work for Governor Quinn and his pals at the public trough and dispense with the personal financial risk, gargantuan hours, sleepless nights, and nearly ceaseless anxiety that goes with owning and running a business?  And if no one started businesses, lured by the prospect of getting rich by being one’s own boss, from where would the jobs and the state revenue come?  

Businesses, and especially small businesses, do a remarkable job of providing employment and generating tax revenue for government at all levels.   But, contrary to the seeming beliefs of Governor Quinn, businesses do not exist to do those things.  The jobs they provide and the revenue they generate for the government are by-products of their primary endeavor, which is, as cold and crass as it sounds, to enhance the financial well-being of their owners.   If the ability of businesses, large or small, to fulfill this ultimate goal is inhibited by the demands of people who have no understanding of what goes on away from the public trough, they will close down or leave.  

Then who will Governor Quinn and his poltroonish pals try to order to do their bidding?