Rep. Steve Gallardo (D-Phoenix), is proposing legislation, supported by ACORN and the AFL-CIO, to raise Arizona's minimum wage to $6.65.
The rationale behind such a proposal comes from the misperception that labor and business are two mutually exclusive adversaries. However, they are both part of the same market. To make up for the cost of higher wages, businesses must either hire fewer people, reduce compensatory, non-wage benefits, or pass on higher costs to consumers. For the minimum wage labor market this is especially true, where workers tend to have the least amount of skills and training, and a marginal increase in their cost of employment will likely have a negative effect on total employment. Moreover, the goods and services produced by low-wage workers are disproprtionately consumed by low-wage workers, meaning the higher costs passed on to consumers due to a minimum wage increase will end up burdening those same low-wage workers.
In the end, while well-intentioned, a minimum wage increase will most likely do the most harm to those it is meant to help. As Texas A&M University economist Donald Deere put it, "passing a law that forces people to earn a minimum amount in order to work seems a cruel policy in an already cruel world."
See the Cato Institute's Keeping the Poor Poor for an analysis of minimum wages.
In an editorial (subscription required) yesterday, the Wall Street Journal urged the White House not to file an amicus brief supporting government takings of private property in the pending U.S. Supreme Court case of Kelo v. City of New London . The case involves an attempt by government officials to seize private property for an economic redevelopment project. Allowing government to arbitrarily take a person's home seems counter to President Bush's goal of creating an ownership society.
The case presents a unique opportunity for the United States Supreme Court to reign in abuse of eminent domain. It is why the Goldwater Institute authored an amicus brief joined by other national organizations and think tanks urging the Supreme Court to overturn the Connecticut decision.
Such a result will provide certainty for property owners and discourage the takings rampage we've seen in the last few years throughout the country. Most important for President Bush, it is consistent with his goal of encouraging an ownership society.
A recent federal study, as reported in the Arizona Republic, notes that Maricopa County's workforce averages a slightly higher weekly wage than the rest of the nation, though it is toward the bottom of the top 10 counties by workforce size.
But as ASU researcher Tom Rex notes, employers are able to pay relatively less because people perceive Arizona as offering a higher quality of life.
Indeed, as part of that quality of life measure, in-migrants may see lower tax burdens (being able to keep and spend more of their income) as an important part of the desirability of different places. In The Tax Man and the Moving Van: Fiscal Policy and State Population Shifts, Senior Fellow Matthew Ladner finds a statistically significant relationship between population shifts between states and tax burdens, business climates as well as the cost of living.
Also, in "Valley must accentuate the positive," fiscal policy analyst Satya Thallam finds that Phoenix and Arizona are producing record population and job growth, placing Arizona among the top performing economies in the country.
The Tempe City Council has approved condemnation of private businesses to make way for a new shopping center. The move violates a key provision of the Arizona Constitution that prohibits taking property from one private owner and turning it over to another private owner. The City's move is likely to face several court challenges.
In 2003, the Arizona Court of Appeals struck down a similar private property grab in Bailey v. Myers, ruling that the City of Mesa could not condemn a family brake shop business and hand the property over to another private businessman.
In an op-ed last July, I reviewed the Tempe case and several alternatives to eminent domain that have been successful in cities such as Seattle. With such options available, Tempe could get its shopping center without violating property owners' rights.
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