Night of the Living Wage; L.W. Reed

This is magic-wand economics at its worst: Want higher wages? Just pass a law making it illegal to pay anything less than some arbi trary amount. Presto! Supply and demand, Lawrence W. Reed is president of the Mackinac Cen terfor Public Policy (www.mackinac.org), afree-mar ket research and educational organization in Midland, Michigan, and chairman ofFEE's Board of Trustees. 14 by LawrenceW. Reed profit and loss, incentives and disincentives all mean nothing if you can get what you want through the force of law. Of course, there's nothing in the ordinance that will make workers more productive, only less affordable. A city that has already driven out a million people and countless businesses with a tax burden more than six times the average for Michigan municipalities will now become even less competitive and economi cally attractive. David Littmann, senior econ omist at Detroit's Comerica Bank, estimates that the ordinance will wipe out about 7 per cent of the city's jobs by the year 2000.

Incredibly, Mayor Dennis Archer, who pub licly supports the living-wage concept, head ed to Washington within days of the vote, seeking federal assistance (that is, other peo ple's money from all over America) to help keep businesses from leaving Detroit. And it isn't just businesses that will be affected. Nonprofit charities will be too. For example, two Salvation Army sites in Detroit receive $300,000 from the city. Most conser vative estimates put the new law's cost to the Army at $1.5 million. The Army will have to raise an additional' $1.5 million, lay off work ers, or become independent of the city. Every argument against the minimum wage-long familiar to readers of The Free man-applies in spades to living-wage pro posals like Detroit's. The law can't make a person worth $5.15 an hour (the current fed eral minimum) by making it illegal to pay him any less. By mandating an even higher mini mum, the living wage prices even more peopIe out of work. The people who push these cockamamie ideas never seem to ask why any employer would hire someone at $7.70 if that person's services are only valued in the mar ketplace at, say, $5.

Moreover, by imposing more unnecessarily costly employment arrangements, the new law will require more city revenue or reduced city services. The long and short of it is this: though some workers may keep their jobs and even see their wages hiked, others will pay the price in the form of fewer jobs or higher taxes. Unemployment resulting from the law will boost the public welfare rolls in a city where the poverty rate-at 30 percent-is already the highest of American cities. Detroit, sadly, is not the first municipality to engage in such foolishness. In 1994, Balti more became the home of the country's first living-wage law. Portland (Oregon), Milwau kee, Minneapolis, S1. Paul, Jersey City, Boston, and Los Angeles have all adopted similar ordinances. Last fall, the city council of San Jose, California, began debate on a living-wage ordinance that would set mini mum hourly pay at an astounding $12.50 plus benefits for employees performing work for the city. On top of that, the San Jose proposal stipulates that any contractor who takes over a city job previously performed by another enti ty would be forced to hire the same people who had been doing that work before.

Who is behind these silly laws? In Detroit, the ballot language was drafted and the cam paign funded by none other than organized labor. Why? Because a city floor under wages will stifle the unions' low-cost competition and make it more difficult for the city to con tract out for services. This is not organized labor playing the role of Florence Nightin15 gale. It is the cannibalization of fellow work ers by greedy, self-interested union bosses. Nationally, the living wage effort is being led by a group known as the Association of Community Organizations for Reform Now (ACORN). Like the unions, ACORN is no paragon of either altruism or intellectual con sistency. Even as it was arguing for the fed eral minimum of $5.15 and lobbying for sky high living wages in a number of places across the country, ACORN filed a lawsuit in California in an attempt to exempt itself from paying its own employees the state's then current $4.25 per hour minimum wage. In its legal brief, the organization declared that "the more that ACORN must pay each individual outreach worker ... the fewer outreach work ers it will be able to hire." Hypocrisy has rarely been on more arrogant display.

Meanwhile, some people and certain busi ness organizations in Detroit that have long viewed the promotion of freemarket econom ics as "too controversial" for their tastes are now reaping the bitter harvest of their "mod eration." In challenging the new law in the courts, they may spend far more than they ever spent on behalf of economic education. Whether they learn anything from it all remains an open question. Too often, in Detroit and elsewhere, the schools don't teach sound economics; or worse, they teach the toxic stuff. Business men devote too much of their resources to politics and too little to the right ideas that can really make a lasting difference for the better. That's why living-wage nonsense suc ceeds in becoming law. We shouldn't be sur prised at the results, and we should be ashamed if by our action or inaction we're part of the problem. D Crimes of the Mind by Melissa Suarez T he killing some months ago of Matthew Shepard has brought to the forefront of debate the idea that a federal law is needed to protect people against "hate crimes." Propo nents want the law to punish individuals who target others because of race, sex, religion, disability, or sexual orientation.