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Citi eyes selling businesses, other options: source
NEW YORK (Reuters) - Citigroup Inc is looking at multiple options as its share price sinks, including selling businesses, selling shares, or merging with another firm, a person familiar with...
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Fed's Bullard: U.S. spending slump to sap 2009 growth
EVANSVILLE, Indiana (Reuters) - St Louis Federal Reserve President James Bullard said on Thursday that financial market turmoil has collapsed U.S. consumer confidence and this would weigh on growth well...
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Oil falls over $1 on demand worries
SINGAPORE (Reuters) - U.S. crude oil dropped more than $1 a barrel on Friday, falling for sixth straight sessions as more distress for the global economy threatened to eat further...
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NY City securities workforce down to Sept 2005 level
NEW YORK (Reuters) - New York City's securities companies shed 16,000 employees in October, measured on a year-over-year basis, pushing the total work force down to a level last seen...
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S&P dives to lowest level since 1997
NEW YORK (Reuters) - Stocks plunged yet again on Thursday, as a frantic flight from risk prompted by investors' deepening economic fears drove the benchmark Standard & Poor's 500 index...
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Democrats demand U.S. Big 3 offer survival plan
WASHINGTON (Reuters) - Democratic congressional leaders, seeking to salvage a bailout of the Big Three automakers, demanded executives provide a business survival plan in exchange for their support of up...
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Marsal to lead team of over 600 at Lehman
NEW YORK (Reuters) - Bryan Marsal, currently chief restructuring officer of Lehman Brothers Holdings Inc , will take over as chief executive of the bankrupt investment bank after the close...
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Paulson defends handling of U.S. financial crisis
SIMI VALLEY, California (Reuters) - Treasury Secretary Henry Paulson on Thursday defended his handling of the financial crisis but refused to say whether any further help will be offered to...
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Dell profit tops Street view, shares rise
SAN FRANCISCO (Reuters) - Dell Inc, the world's No. 2 PC maker, posted a better-than-expected quarterly profit on Thursday as cost cuts offset lower revenue, sending its shares up about...
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Fannie Mae, Freddie Mac suspend some foreclosures
NEW YORK (Reuters) - Fannie Mae and Freddie Mac, the two biggest U.S. home loan finance companies, on Thursday said they would suspend foreclosures of occupied homes until early 2009,...
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Written by Adam Wilson
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Thursday, 24 July 2008 10:54 |
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Minimum Wage Folly
Around the country today, Democratic Congressmen are congratulating themselves as the federal minimum wage is set to increase by 70 cents to $6.55 per hour, a supposed victory for the working class. This is the second of three annual increases, as required by legislation passed last year. My own Representative, Congressman Elijah Cummings, went so far as to claim that “[w]ith the additional money provided by our legislation, a family can buy an additional 15 months of groceries, 19 months of utilities, and 20 months of childcare.” If that’s the case, I’d like to know where Congressman Cummings shops and who his energy provider is.
The reality is that consumer prices are soaring, with food and energy being especially hit hard. Such price increases disproportionately hurt the poor and the middle class, constituents that Democrats supposedly represent. So in response to rising inflation, did our lawmakers address the problem of high prices? Of course not. Instead of stopping to consider what causes high prices in the first place, and how such price increases may be stopped, the Congress decided that the best answer to high prices is to force wages up.
Unfortunately, this just highlights the vast amount of economic ignorance that exists within the Congress. Consider the effects that a rise in the minimum wage must have. For instance, an increase in the minimum wage, by itself, cannot create any new jobs. Therefore, the best we can hope for is that a higher minimum wage will not affect unemployment. However, this is highly unlikely – wages are an expense to a business, and if these costs go up, they are more likely to let some workers go, causing higher unemployment. Furthermore, if a business does not let its workers go, it will likely pass on the costs to consumers in the guise of higher prices. In other words, the Congress has actually exacerbated the problem that it is supposedly trying to fix.
But let’s consider a more fundamental question. Does Congress really want to stop higher prices? On the same day that the new minimum wage goes into effect, the Congress voted to bailout Fannie Mae and Freddie Mac, with an open-ended line of credit. Essentially, this means that the US Treasury can provide those two corporations with an unlimited amount of dollars. And as more dollars get printed, prices will continue to increase. So on the one hand, Congress votes to give billions of dollars to private corporations, and on the other, they vote to give the poor a raise of about $1500 per year. This is the way our current Congress works – provide just enough crumbs to “the little people” to make it look like Congress cares about them, while giving away vast sums of money to their friends in corporate America. Americans are waking up to this fraud, as Congress’s approval rating has recently dropped to just NINE percent.
It’s not a coincidence that Congressman Cummings voted for this bailout – he’s received $10,000 in donations from Fannie Mae and Freddie Mac since 2003. If your Congressman voted for this or any other bailout, be sure to go to the FEC website where you can discover how much money s/he gets from corporate special interests. It’s time we take the power away from special interests and return it to the people. |
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