To Raise Wages, Government Must Work With – Not Against – Businesses

Minimum wage laws are the central plank of Democratic Party’s social mobility policy. Although well-intentioned, minimum wage laws suffer from a fatal flaw. They impose an arbitrary price on marginal employment. Divorcing worker productivity from worker compensation, minimum wage laws decrease employment and opportunity. Yet what’s also true is that too many American families are struggling to save for a home, or for their kids’ education, or simply make ends meet.

Although well-intentioned, minimum wage laws suffer from a fatal flaw. They impose an arbitrary price on marginal employment.

These Americans deserve a better future. Conservatives have the chance to give it to them.

We need to make it easier for businesses to operate. In today’s globalized economy, businesses are choosing to operate in the nation or state where the barriers to doing business are lowest. And were President Trump and Congress to simplify the corporate tax code, it would give an immediate boost to the arm of American businesses. The tax code is notoriously complicated. It takes legions of lawyers, armies of accountants, and hours of stress for business owners just to operate. But conservative states can also help by incentivizing business relocations. Indiana’s Headquarters Relocation Tax Credit, for example, incentivizes businesses to come to the Crossroads of America. Oklahoma and Texas offer similar, easy-to-navigate guides for prospective business relocations.

Today, too many businesses see their lowest paid employees as replaceable assets rather than human capital worthy of investment. But the beauty of our free market society is that consumers have choices. By choosing companies such as Walmart, which offer employee advancement, we can use our wallets to petition for change. In the same way, corporate board-members should focus on hiring CEOs who will make profits, but also help employees get ahead.

By choosing companies such as Walmart, which offer employee advancement, we can use our wallets to petition for change. In the same way, corporate board-members should focus on hiring CEOs who will make profits, but also help employees get ahead.

Of course, government also has a constructive role in supporting businesses, One of the ways it can do this is by encouraging education. The reason why many Americans are stuck in low wage jobs, or lack jobs, or have given up looking for jobs, is not a result of what’s happening in Mexico, but rather about skills. Put simply, too few American workers possess the skills to thrive in the economy. We need policies focused on improving productivity and boosting skills. We also need to ensure that government policy serves innovation. If, like Germany, we have a workforce that can meet the varied consumer demands of the 21st century, jobs will quickly become better paid. If an employee makes more revenue for his or her employer, he or she can demand higher wages. This should be the conservative counterpoint to the minimum wage.

The great strength of the American economy — which has made America the world’s only superpower — is the human capital of American workers. In 2017, just as we invest in the best machines and best medicines, we need to invest in better workers. Working together, businesses and government can help Americans gain more skills and earn more opportunities. And if successful, that endeavor will prove capitalism continues to render worth for all in our society.

Tom Rogan is a columnist for Opportunity Lives and National Review, a former panelist on The McLaughlin Group and a senior fellow at the Steamboat Institute. Follow him on Twitter @TomRtweets. Email him at Thomas.RoganE@Gmail.com