It’s hard to argue with President Obama’s contention that people who work full time shouldn’t live in poverty. No American who works hard and plays by the rules should be deprived of dignity and a decent way of life.
The question is how best to achieve the president’s laudable goal. Mr. Obama has proposed raising the federal minimum wage to $9 an hour, an increase of nearly $2 from today’s $7.25. It’s not certain how many workers will rise from the ranks of the poor thanks to such an increase. But what is certain is that hundreds of thousands of minimum-wage jobs will disappear, as many employers will not or cannot pony up the additional $1.75.
Mr. Obama is hardly the first politician who believes that government can move the poor into the middle class through government mandates. But this proposal is particularly ill-timed. The U.S. is not producing the job growth we need to create mass prosperity. This proposal may benefit a few, but it will hurt many who find themselves out of work and will not be hired as employers retrench rather than expand.
There is another way. Rather than forcing employers to pay more for minimum-wage labor, we should focus on the creation of new well-paying jobs that will kick-start this economy out of the doldrums. Rather than relying on old solutions, we should unleash the forces of commerce that have been held back by regulation, uncertainty and lackluster leadership.
The best way to create jobs that pay a living wage is not by mandating pay increases from Washington—a one-size-fits-all policy that does little to recognize regional economic issues and challenges. The best way to achieve the president’s goal is by creating economic policy that inspires the nation’s job creators to do what they do best: create jobs. Prosperity will follow.
The dynamism of American capitalism was one of the wonders of the 20th century. Tens of millions were lifted into the middle class not through policies like the minimum wage, but through smart collaboration between government and the private sector.
Regrettably, relations between government and the private sector have been poisoned in recent years as populists have painted job creators as the source, rather than the solution, of our economic problems.
Mr. Obama’s goal of a prosperous work force is admirable. But he must reconsider the best way of achieving it.