Don't raise the minimum wage in Maryland

February 08, 2011

They're at it again, trying to bump up the minimum wage in Maryland from $7.25 to $10 per hour in 2013 ("Raising the standard," editorial, Jan. 21). Happily, even some of the Democrats recognize that if we want to create jobs then we shouldn't go around making it more expensive to employ people. I give Sen. Thomas Middleton (Democrat of Charles County) credit for pointing out that, "We're trying to create jobs. We're trying to hold on to what we've got. I think raising the minimum wage goes against that."

Yet there will always be those who turn a blind eye to the problems that come with increasing the minimum wage. In its recent editorial, the Baltimore Sun commented with disappointment that the proposal "is in danger of getting the kind of lukewarm reception lawmakers in Annapolis usually reserve for root canals or ethics legislation."

It seems the editorial got most of its facts from an article on The Daily Record website, which points out that 17 states in the U.S. and Washington, D.C. have minimum wages above the federal level. The Sun notes that nine of these 18 have unemployment rates below the national average — forgetting, I guess, that this means that the other nine are experiencing the less pleasant side of that average.

Progressive Maryland has already gone to bat for the legislation, and they even went so far as to get an economist from the Economic Policy Institute, Heidi Shierholz, to state publicly that, "increases to the minimum wage don't lead to job losses." Perhaps she lives in a land different from mine, but where I come from people tend to buy less of something when the price goes up. Why would labor be any different?

My father, Stephen J.K. Walters, a professor of economics at Loyola University Maryland, has said that, "the idea that minimum wage hikes do not destroy jobs originated in a widely discredited paper a few years ago claiming that when New Jersey raised its minimum wage one time and Pennsylvania did not, there were no disemployment effects at fast food restaurants on the New Jersey side of the border." Sadly, just like Freud's research and economist John Maynard Keynes' writings, people still believe the original even when the preponderance of the evidence suggests that they were mistaken.

Another economist and self-proclaimed progressive, Josh Dowlut, weighed in on The Sun's editorial with a comment whose insightfulness deserves reproduction. "The absurdity of Progressive Maryland's argument," he concludes, "is that they fail to concede any tradeoff cost. The slightest degree of critical thinking sees that there must certainly be a tradeoff cost, otherwise why not make the minimum wage $100/hr? And in failing to identify or concede any tradeoff cost, Progressive Maryland violates the Golden Rule of all economics: There is no free lunch."

An attempt to help our nation's poor in these troubled times may seem admirable, but this one is completely misguided. It puts those with few skills and even fewer options at an increased risk of unemployment by further increasing the cost of employment in Maryland. This is the opposite of what we should be doing. If we want to inject extra money into our struggling economy we should think about lowering taxes — specifically property taxes in Baltimore, where rates are twice what they are in surrounding counties.

John J. Walters

The writer is a research associate at the Maryland Public Policy Institute.

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