Is The Federal Minimum Wage Unconstitutional?

Editor’s note: This article first appeared at TheBlaze.com.

It’s a familiar political scenario: Behind the fig leaf of compassion and fairness, progressives and the union-dominated Democratic Party want the federal government to raise the minimum wage.

Democratic presidential candidate Hillary Clinton favors a $12 per hour federal minimum wage, while her competitor, Senator Bernie Sanders, one-ups her: He favors raising the federal minimum to $15 per hour. The economic folly of the living wage/minimum wage nonsense is as plain as day to anyone with eyes to see.

Now for some good news: While reason and persuasion aren’t going to deter progressives from pursuing their ideological quest, it is now quite possible that our judicial system will. According to the Supreme Court, minimum wage laws may now be unconstitutional. Specifically, such laws run afoul the “disparate impact” principle set forth in last June’s Supreme Court decision in Texas Department of Housing v. Inclusive Communities Project.

First, a little history:

Raising the federal minimum wage has had a disproportionately disparate—adversely disparate, in fact—impact on African American male teens for over half a century. The underlying economics is elementary: When a price is set above the market-clearing price, a surplus—in this case, of those seeking work—is created, so buyers can cherry-pick whom to hire. Most employers are white, and whether they select white kids for whatever reason, the bottom line is that young whites have been hired at a higher rate than young African Americans.

In his path-breaking 1982 book, “The State Against Blacks,” economist Walter E. Williams published Bureau of Labor statistics showing the emergence of a racially disparate impact of the minimum wage from the 1950s through 1980. During the ’50s and ’60s, the ratio trended inexorably upward until, from 1972 to 1980, the ratio was always greater than two-to-one—that is there were more than twice as many unemployed African American teens.

In the decades since Williams’ book first appeared, the minimum wage has continued to keep young African Americans unemployed at close to twice the rate as whites. For example, in September 2009, in the first two months after the current $7.25 federal minimum wage went into effect, the unemployment rate for male African American teens rose from 39.2 percent to 50.4 percent, compared to the overall teen unemployment rate rising from 23.8 percent to 25.9 percent. In June of 2012, the unemployment rate for African American teens was 39.3 percent compared to 20.9 percent for whites of the same age. In January 2015, the unemployment rate for African American teens was 29.7 percent versus 16.4 percent for white teens.

Enter, the Supreme Court’s Texas Housing decision. In this decision, the court strengthened the 1964 Civil Rights Act’s Title VII, which defines as discriminatory and illegal any policy or practice that has a disproportionately adverse impact on a “protected class,” such as African Americans. Further strengthening Title VII, Justice Anthony Kennedy’s majority opinion states that Congress intended the Civil Rights Act to “proscribe … practices that are fair in form, but discriminatory in operation,” and he explicitly stipulated that one of the intents of the Civil Rights Act was to achieve “equality of employment opportunities.”

Kennedy went on to write, “Disparate-impact liability mandates the ‘removal of artificial, arbitrary, and unnecessary barriers,’ not the displacement of valid government policies.” If you stop to ponder what that sentence means, you will see that it is highly problematical, for nowhere in Kennedy’s opinion are there any “bright line” criteria for determining what constitutes a “valid” policy. However, it is difficult to think of a more “arbitrary” policy than Congress picking a number that sets an “artificial” limit on the pay that two willing Americans (employer and employee) may freely legally contract for—limits that are not only completely “unnecessary” but, in practice, highly discriminatory.

There is a certain exquisite irony in a flawed, idealistic decision like Texas Housing undermining the constitutional viability of the federal minimum wage law. In their attempt to construct a “Great Society” or “Brave New World,” would-be social engineers inevitably make a mess of things. The left hand doesn’t know what the right hand is doing.

For example, one New Deal program was to build a government-planned rural community named Aksarben (that’s “Nebraska” spelled backward) from scratch. It never worked, not least because the government-ordered prefabricated houses didn’t fit the government-ordered foundations. Similarly today, the glaring incompatibility of the minimum wage law and the Texas Housing ruling shows the absurdity of top-down government planning. The progressives want to have their cake and eat it, too, with progressives in Congress wanting to mandate higher wages while progressives in the Supreme Court ruling against laws that produce discriminatory results.

The minimum wage law has violated freedom of contract and victimized young African Americans unfairly for far too long. Armed with the Supreme Court’s Texas Housing ruling, let’s hope some talented legal eagles mount a lethal challenge to the federal minimum wage law ASAP. If an imperfect Supreme Court decision marred by vague language is the best tool available to liberate African American youths from the patent injustice of progressives’ minimum wages laws, then let us hope that it is so employed.

 

– See more at: http://www.visionandvalues.org

Feeling Good About America On A Chilly Autumn Evening

Don’t you love it when something heartwarming happens to you unexpectedly? That happened to me on October 1. My friend Ron invited me to go with him to Cleveland to see the game that night between the Indians and the Minnesota Twins. Neither of us had any connection to either of the teams (I’m a lifelong Tigers fan and Ron is a lifelong Pirates fan), but I had never seen Progressive (formerly Jacobs) Field before, so off we went.

From the moment we left the parking garage and walked a block to the ballpark, I felt comfortable. Usually, cities tense me up, but Cleveland had a small-town “vibe”—calm, safe, and peaceful. As we crossed the street to the stadium, we encountered a large statue of Larry Doby. That was a nostalgic moment for me. Doby was a Cleveland outfielder in the first major league baseball game I ever attended, way back in the 1950s at Briggs (later Tiger) Stadium in Detroit. For the benefit of younger readers who may not recognize his name, Doby is historically significant to major league baseball because he was the first African-American to play in the American League, just as Jackie Robinson had broken the color barrier in the National League. A seven-time All-Star center fielder and Hall-of-Famer, Doby (along with teammate Satchel Paige) became the first African-American to be a World Series champion when the Indians won in 1954 after Doby led the league in home runs and RBIs.

Read: Bonding Over Baseball

Read: Bonding Over Baseball

Snapping out of my nostalgic reverie, my thoughts shifted from past to present as we approached the turnstiles. My first impression: Baseball near the shore of Lake Erie on an October night is a chilly proposition! The cool wind off the lake is impossible to ignore. I can’t imagine what it would be like to play a World Series game there in November. Second impression: The people working at Progressive Field were as warm as the air was cold. I have never met people as uniformly friendly as the off-the-field team assembled by the Cleveland Baseball Club.

The security inspectors at the turnstiles were relaxed and affable. They treated us like welcomed guests instead of like cattle. The lady at the hamburger stand must have served thousands of other customers during the season, but she made me feel like I was her first-ever customer. She greeted me with a beaming smile, twinkling eyes, and overflowing kindness. The ushers, too, were helpful, courteous, and friendly. They took a personal interest in us rather than thinking of us as numbers in a crowd.

We had arrived early and soon went to escape the cold in the Terrace Club—an enclosed area—to wait there until the game started. We had already just eaten and didn’t need a table, so after checking out the Bob Feller exhibit in the waiting area, the cheerful hostess invited us to sit in a couple of comfortable chairs.

Read: Time for Face Time with Vladimir Photo: JEWEL SAMAD/AFP/Getty Images)

Read: Time for Face Time with Vladimir Photo: JEWEL SAMAD/AFP/Getty Images)

What happened next touched my heart. Out on the field, a young lady was ready to sing the national anthem. Ron and I rose, and then, almost to my surprise, every single person who was sitting in the restaurant area in front of us, also rose and doffed their caps. They could have stayed seated, being physically removed from the stadium seats by privacy glass, but they didn’t. God bless the people of Cleveland! They are true patriots.

For me, the good people we encountered that night at Progressive Field helped forge a bond with the city where my late mom grew up—a great American city with some of the friendliest people I have ever met. For you who have read this, I hope this story will be an encouraging reminder that there are a lot of good people in our country. This everyday goodness, not the evil done by a few warped individuals, is what America is really all about. We have a lot to be proud of and a lot to be grateful for.

The views expressed in this opinion article are solely those of their author and are not necessarily either shared or endorsed by WesternJournalism.com.

Hillary Clinton’s ‘New College Compact’ Raises An Important Question: Did She Ever Take Econ 101?

Editor’s note: This article first appeared at Forbes.com.

Today’s version of “a chicken in every pot” is Hillary Clinton’s proposed plan to “make college affordable and available to every American.” This is political catnip, pure and simple. And it is a more delusory form of catnip than Herbert Hoover’s “chicken”; for while everybody needs enough to eat, not everybody needs to go to college.

There is today an oversupply of college degrees. A Federal Reserve study found that half of recent graduates were working in jobs that didn’t require a college degree or not employed at all. For Mrs. Clinton to propose spending $350 billion to subsidize college attendance will exacerbate rather than reduce the glut of college-educated Americans. To propose such wastefulness when federal debt already exceeds $18 trillion is fiscally irresponsible and a slap at American taxpayers. It will also increase the number of graduates experiencing disillusionment when they realize the lack of market demand for their degrees.

The increasingly overt socialistic nature of Mrs. Clinton’s campaign theme is glaringly evident in her “New College Compact.” She laments: “For too long, families have been left to bear the burden of crushing costs” of a college education. Heaven forbid that Americans be expected to pay for what they consume! (A quick “thank you” here to those whose generosity funds academic scholarships to highly qualified and motivated students from poor backgrounds.) Who does Mrs. Clinton think should pay if not the consumer? Her plan explicitly specifies that the federal and state governments (i.e., the taxpayer) should foot the bill at public universities and colleges.

Along with state financing, Hillary Clinton advocates increased state control. She thinks that government should micro-manage post-secondary institutions by telling colleges where they must spend their money (less on administrative expenses), commanding colleges to accept junior college credits (regardless of the four-year colleges’ own academic standards), and deciding when to waive accreditation standards.

Clinton’s disfavor of the private sector is obvious: She expresses sympathy for students with “an expensive degree from a for-profit institution,” only to find that a degree doesn’t lead to a job. Why single out graduates of for-profit colleges and universities when the same disappointment befalls many graduates of not-for-profit institutions, too? And why should students who agree to work for government receive earlier cancellation of their debts than private-sector workers? That’s a double-whammy on the taxpayer, whose taxes first would subsidize the student’s education and then pay the student’s salary after college. And why is it necessary for government to make sure that community colleges offer more “two-year degrees and certificate programs that are valued by employers”? Why can’t private educational entrepreneurs survey the marketplace to discern what degrees and certificates are valued and then profit by providing them?

As for the horrendous problem of college debt blunting the lives of millions of younger Americans, Clinton doesn’t acknowledge that the federal loan program is responsible. If she were not so ideologically averse to the private sector, she might see privatization of the college loan market as the solution. First, though, bankruptcy laws should be revised to include college debt. It is anomalous and unjust to allow mature adults with decades of business experience to erase their debts via bankruptcy if they make a miscalculation, but to deny such mercy and financial relief to young, inexperienced adults. If private lenders issued college loans, and they knew that bankruptcy was an option for young borrowers, then those lenders would calculate that risk. They wouldn’t lend tens of thousands of dollars to students floundering for five or six years or students taking courses that have little value to the job marketplace, and so the glut of over-educated/under-employed young people would shrink.

There is one aspect of Clinton’s higher education plan that makes some ethical, if not economic, sense. Ethically speaking, it seems unfair for the Fed to have engineered low borrowing costs for Uncle Sam while at the same time not sharing some of its windfall by refinancing student debt at lower rates. (Many students are still paying off loans at seven, eight, or nine percent.)

Economically speaking, though, Hillary Clinton has no business promising that the federal government “won’t profit off student loans.” While “profit” apparently is a dirty word to Clinton, any loan program should generate enough interest income to pay for the salaries, offices, etc., of those administering the loan. If the federal college loan program doesn’t cover its own costs, then, once again, the long-suffering taxpayer gets stuck with those costs. The economically rational approach is to let the private sector figure out what an economically viable loan market for college education looks like. Economic losses to our society would decline by billions if privatization of student loans supplanted the socialistic status quo.

The New College Compact proposed by Hillary Clinton is economically wasteful central planning, all wrapped up in the beguiling garb of Santa Claus politics. Caveat emptor. Let the buyer (in this case, the American taxpayer and voter) beware. There ain’t no such thing as a free lunch.

The views expressed in this opinion article are solely those of their author and are not necessarily either shared or endorsed by WesternJournalism.com.

This post originally appeared on Western Journalism – Equipping You With The Truth

Time For A Supine Congress To Reassert Itself

Congress is one of the least respected institutions in the United States. A Rasmussen Reports phone survey published last month “finds that just 13% of Likely U.S. Voters think Congress is doing a good or excellent job overall, while 56% rate the current Congress poorly.” 13% is lousy, but it is almost double the 7% rating of a year ago when the memory of the Senate’s dysfunction under former Majority Leader Harry Reid was fresher.

Congress’ reputation suffers for a multiplicity of reasons, including hypocrisy, perceptions of corruption (e.g., enriching themselves at public expense or selling themselves to the highest bidder), the pervasive nastiness of venomous rhetoric, etc.; but from my perspective, Congress’ biggest problem is disloyalty to the Constitution stemming from political cowardice. For decades, Congress’ members have abdicated their constitutional prerogatives. Rather than honoring their oath to uphold the Constitution and its system of checks and balance, a majority of members have chosen the path of least resistance by delegating or ceding to others the often-unpopular decisions that the people’s representatives are supposed to make.

Congress has ceded power to the Federal Reserve and sundry multilateral institutions like the IMF, UN, et al., as well as to the other two branches of the federal government—the executive and judicial. I’ve taken on some of the multilaterals elsewhere. Today, I’ll suggest several steps Congress could take to reclaim some of its rightful power from the other two branches of government in Washington, and thereby possibly earn more respect. Admittedly, the steps I will propose won’t come to pass as long as a “progressive” is in the White House.

The executive branch has been steadily usurping congressional prerogatives for decades. The process has accelerated markedly during the Obama presidency–think EPA, BLM, NLRB, FCC, etc. Here are four policies designed to curb executive-branch power that congressional Republicans should vote into law in early 2017 if they are fortunate enough to retain the House and Senate and win the White House next year:

1) John Stossel’s important special “Green Tyranny” showed how the EPA has been cramming loathsome propaganda down the throats of our children in public schools. It’s worrisome enough when the Department of Education seeks to centralize educational standards in Washington, but for other agencies that weren’t even chartered for educational purposes to develop and impose our public schools’ curricular content is unacceptable. Congress should shut down the Office for Environmental Education that Congress itself unwisely created in 1990 and defund all indoctrination programs within the executive branch.

2) Earlier this summer, Investor’s Business Daily reported that the Consumer Financial Protection Bureau and the Department of Justice both have collected tens of millions of dollars in fines from private corporations and then disbursed the funds collected to various “activist” organizations. While a worthy ultimate goal would be the abolition of the unaccountable, undemocratic CFPB, the least Congress should do is pass a law that any funds collected as fines by the executive branch shall be deposited with the U.S. Treasury so that Congress (which has the constitutional power of the purse) may determine the disposition of those funds. (For the record, Congress shouldn’t be in the wealth redistribution business either; but at least members of Congress can be voted out of office, whereas officials of DOJ, CFPB, etc., are insulated from the electorate.)

3) Much mischief has come out of the incestuous relationship that Milton Friedman dubbed “the iron triangle.” This is the loop whereby special interest groups lobby Congress for more spending, a pliable, complicit Congress then increases appropriations to particular agencies, and then the agencies grant that money to the special interest groups that lobbied for the spending increases so that they can keep lobbying for another round of spending increases. The taxpayer is the perennial victim of “the iron triangle.” Congress could end this scam by forbidding federal agencies from giving grants to special interest groups (whether profit-seeking corporations or not-for-profit organizations) and cutting from agencies’ budgets the full amount they currently spend on such grants.

4) Here’s the big one: Of the flood of rules coming out of Washington that Americans must obey, fewer than 5% are laws passed by our elected representatives in Congress; the other 95% are promulgated by unelected, undemocratically unaccountable bureaucrats in the executive branch. Again, this is Congress’s fault. Decades ago, Congress adopted the policy of allowing executive branch agencies to promulgate regulations that take effect automatically unless Congress specifically votes against them within 90 days. Members of Congress rarely have time to read every word in the laws they pass (remember Obamacare!), much less every regulation that comes down the pike–and so lots of lousy regulations slide through. Congress needs to reverse the process: Instead of a rule becoming the law of the land unless Congress says it isn’t, nothing should be the law of our land unless Congress says it is. One of the fundamental constitutional principles is that Congress is the legislative—the law-writing—branch of government. It’s time to cancel the executive agencies’ virtual blank check to impose rules upon us.

Besides Congress, the Supreme Court also recently intruded on Congress’ legislative prerogative when Chief Justice Roberts stated in his opinion in King v. Burwell that the phrase “state exchange” in the Affordable Care Act really meant “a state or federal exchange.” House Speaker John Boehner won’t push back and risk media outrage, but a bolder congressional leader would call for a vote to amend the ACA by inserting language stipulating a federal exchange. Then, if Congress explicitly refused to adopt such language, the Supreme Court would be in the position of insisting that Congress adopt a provision that it explicitly voted not to adopt. With Obama taking SCOTUS’ side, the Court’s reinterpretation of the law would stand; but then the Speaker could rebuke the Court by presenting a motion to censure Mr. Roberts.

Come on, Congress! Push back. Assert your constitutional prerogatives and regain your relevance.

The views expressed in this opinion article are solely those of their author and are not necessarily either shared or endorsed by WesternJournalism.com.

This post originally appeared on Western Journalism – Equipping You With The Truth

The ‘Not Enough Jobs’ Scenario: An Economic Fallacy (But Possibly An Accurate Forecast)

Editor’s note: This article first appeared at Forbes.com.

Once again, a scholar with impressive credentials is broadcasting the gloomy notion that Americans face a job-poor future. The insufficient-jobs scenario appeared in George Mason University economist Tyler Cowen’s book “Average Is Over a couple of years ago. It resurfaced again recently in the Pittsburgh Tribune-Review. Vivek Wadhwa, “a fellow … director of research … and distinguished scholar” at several prestigious universities, wrote that we need “a new version of capitalism” for “dealing with our jobless future.”

The crux of Wadhwa’s argument is his belief that technological progress will result in a society divided between a technologically savvy elite, who will prosper mightily, and a larger number of Americans whose jobs will be rendered obsolete and won’t be able to find new jobs. There’s an obvious fallacy here: If technological progress reduces employment opportunities, then why are hundreds of millions of people still working in the technologically and economically advanced countries of the world? What is it with these intellectuals and the recurring nightmare that progress results in a dearth of jobs?

An incident that the late economist Milton Friedman related comes to mind: While visiting a populous but undeveloped Asian country several decades ago, Friedman saw a gang of workers using shovels to excavate a hole where a building’s foundation would be laid. Friedman noted that the job would be completed much more quickly if a modern excavating machine were used. His host replied that a deliberate decision had been made not to use such a machine because the government wanted to maximize employment. Friedman’s rejoinder was to the effect that if the goal were to maximize employment in the country, they should ban the use of shovels and equip a far larger number of laborers with spoons. It doesn’t require great vision to realize that a fully employed nation of spoon-wielding ditch diggers would remain a very poor place.

Can anyone doubt that technological progress has led to economic advancement? The economic principle is elementary: As worker productivity increases (that is, as more wealth is produced from fewer units of labor) prosperity rises, too. When improved agricultural productivity has bankrupted farmers and resulted in our food supply being produced by an ever-smaller percentage of Americans, what has happened to all those ex-farmers? They found employment in new fields, thereby increasing the number and variety of goods and services produced. In other words, more wealth was created; and that is how a society achieves higher standards of living for the masses.

What has just been described is Schumpeter’s process of creative destruction. Old jobs that produce things of less value become obsolete, and new jobs producing things of higher value take their place. This is the natural evolutionary course of free markets.

Any notion that there is a ceiling to the number of potential jobs ignores an elementary and undeniable economic truth—namely, that there is no limit to the potential number of jobs because there is no limit to mankind’s wants. As technology makes it possible to produce what are considered the modern necessities of life (cars and cell phones in addition to the traditional necessities of food, clothing, and shelter), more workers will be available to produce and provide new goods and services that entrepreneurs are dreaming up every day of the year.

Is there anything that can inhibit or halt the natural tendency of entrepreneurs in market economies to generate new job opportunities? Yes, indeed. Government intervention—excessive and costly regulations, wealth-and capital-depleting taxation, misallocation of resources via government spending programs, depreciating currency, etc.—can stifle economic activity, discourage business formation, and cause job opportunities to dry up.

What is scary about Wadhwa’s thesis and related plans (such as Hillary Clinton’s proposal for government to lay a heavier, more controlling hand on American entrepreneurs and businesses) is that their ill-conceived policies will produce results opposite to what they claim to be seeking. There will be less employment instead of more.

When Wadhwa says we need a new “capitalism” that redistributes more wealth and provides everyone with a taxpayer-supported guaranteed income, he is doing two destructive things: First, he is perpetrating a pernicious lexicographical hoax, proposing a new form of statism that is a repudiation of free markets—i.e., that is anything but “capitalism.” A more honest statement would be “It is time to replace capitalism with greater government control of economic activity.” The second destructive aspect of his suggestion is his apparent blindness to the fact that maximum economic freedom—true capitalism—is the world’s best hope for expanding job opportunities. To jettison capitalism and replace it with a greater degree of statism will impede economic growth, squelch the growth of businesses, and consequently hinder job creation, to the economic detriment of those who are hoping for jobs.

There will be enough jobs for Americans only if the political planners surrender their mad ambition to direct the economy from Washington.

The views expressed in this opinion article are solely those of their author and are not necessarily either shared or endorsed by WesternJournalism.com.

This post originally appeared on Western Journalism – Equipping You With The Truth