Revisiting a confusing topic

By Scott T. Holland
Associate Editor

December 20, 2006 09:41 am

— Apparently I’m big in Colorado and Texas, or so I gathered from reader response to last week’s column on the minimum wage increase issue.
With Illinois Gov. Rod Blajogevich and his Elvis hair signing that state’s increase on Monday, I figured it would be appropriate to revisit the topic. Plus, it was either that or write about how my 2 1/2-year-old son almost burned down our house last week. It’s frustrating enough to see a pile of presents on the floor where our tree used to be, there’s no need to revisit the entire episode.
Anyhow, I received two e-mails after the minimum wage column, one only a matter of minutes after it was posted on our Web site. That note came from John Nothdurft, press coordinator for FairTax.org, a Web site devoted to the cause examined Thursday in our Walter E. Williams column.
“As you may be aware,” he wrote (note: I was not), “we are the largest tax reform group in the nation with over 700,000 grassroots supporters and our legislation HR 25 is the most broadly backed with over 60 co-sponsors.”
John was merely forwarding me a letter from Ken Hoagland, the communications director for FairTax.Org, based in Houston.
“There is a simple way to help low-income workers who need a raise which far surpasses the limited help increasing the minimum wage would provide. The FairTax solution, now pending as HR 25 in Congress, entirely eliminates federal taxes on the poor, including the highly regressive FICA tax and gives the nation’s economy a huge boost. Under the FairTax there are no federal taxes withheld so what workers make is what workers take home in their paychecks.
“The FairTax also helps the national economy by eliminating capital gains taxes, self-employment taxes, inheritance taxes and at least $265 billion in annual tax compliance costs under our nearly indecipherable current tax code. Leading economists estimate a much healthier savings rate as we eliminate direct taxes on earning when we switch to a national consumption tax with a far broader base. They also predict a 10.5 percent increase in the Gross Domestic Product under the FairTax within five years. It is simply a better way to collect national revenues with far reaching benefits helping the working poor and the nation as a whole.”
Um... OK. I think I understand what the guy is saying, but the notion of eliminating federal taxes on the poor works up to the point where I disagree with the federal government’s definition of poor. But, the feds usually get just about everything right on the first try, so I suppose we wouldn’t have too much to worry about.
Another e-mail came from Scott Evans of Longmont, Colo. He offered “some points” my column “should have touched on to be more informative.”
While I could quibble about the nature of commentary versus presentation of facts, he did raise some good issues that should be considered in any serious debate about a minimum wage increase.
n The extremely low percentage of the entire workforce that works minimum wage jobs.
n Waiters and waitresses who actually make below minimum wage as a salary, but much, much more than minimum wage due to receiving tips, are counted among minimum wage workers.
n In many states, if not all, union wages are directly tied to the minimum wage rate, so when the minimum wage increases, so do many union workers’ wages.
n When the minimum wage rate increases, it forces many employers to choose which workers to keep and which ones to let go because the products and/or services they provide cannot be priced high enough to pay their increased payroll expenses. Of course, those payroll expenses are not only made up of wages, but of FICA taxes, unemployment insurance, workman’s compensation insurance, etc.
Agreed. My main goal was to illustrate the complexity of the issue, and adding more complicating factors only further illustrates my point — the issue isn’t the minimum wage, it’s likely the national economy as a whole, and good luck solving that problem any time soon.
States, like Iowa, that do not constantly tweak their minimum wage will continue to deal with these issues. The cost of living increases every year and ultimately gets to a breaking point where minimum wage is an obscenely low figure relative to the local economy and people on both sides complain until there’s a temporary resolution.
We’re just about there in Iowa, and perhaps at the federal level, and I expect this topic to be hotly debated in the coming months. Hopefully it will wait until baseball season, because I’d much rather write about people making $5.15 million a year than the merits of paying some people $5.15 an hour. Somehow, the former actually makes more sense.

Scott T. Holland’s column appears every Wednesday in the Clinton Herald. His e-mail address is scottholland@clintonherald.com.

The real reason
The main reason I focused today’s column on reader feedback was so I’d have a chance to run this poem sent to me by a reader in Fulton, Ill. Titled “Fulton’s Unsung Heroes,” I felt it deserves to be printed, especially since we won’t be having a white Christmas. The author’s name is omitted “lest some would judge 11th Avenue was soliciting preferential treatment.”

’Twas the last day in November of 2006.
The media predicted we’d be “in a fix.”
A winter advisory was the term they used,
And the residents of Fulton were not amused.
Be prepared in Whiteside and around
A whole lot of snow will cover the ground.
What about school, or work, or meetings to go?
They’ll have to be canceled because of the snow.
That evening the phone lines were busy for sure,
Discussing the weather and how we’d endure.
Fulton went to bed all cozy and warm,
And while they were snoozing came the big storm.
But the unsung heroes of Fulton town
Were watching closely as the flakes came down.
They jumped from their beds, braved the chill,
Climbed into the snowplows, their duties to fill.
The best in our land, our city crew —
If you aren’t a believer I pose this to you:
Slide across the river or to neighboring town…
You’ll find our roads are the best cleared around.
With the tenacity of the shoemaker’s elves
The crew diligently labor, in spite of themselves.
A beautiful sight to one and all
Is the plow’s yellow light on our bedroom wall.
The drone of the snowplow is a welcoming tune
As the roads are clearing in the light of the moon.
So during this season of love and good cheer,
We thank you Road Crew, we’re glad you are here.

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