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Disincentives to
Improving Skill Sets

June 6, 2016

Often discussions relating to raising minimum wages center around business costs.  In reality, there are deeper concerns.  During a recent nationally published interview with the CEO of a high-end specialty sandwich shop, the CEO explained they’d find ways to endure, and then he offered a chilling comment.  Once workers realize they can receive high wages without obtaining the skills needed to hold such jobs, how many will bother to increase their skill level?  By diluting the incentives to improve one’s self and thereby moving up the economic ladder, he contended, we risk creating huge gaps in the availability of skilled labor!

Incentives, fulfilling dreams, and a variety of adversities all play essential roles in developing character, mankind, and nations.  We contend that setting about to equalize the wages of the labor force through mandated wage increases violates human nature and, in the end, weakens our society and threatens to destroy its very fabric.

So why is the idea of increased minimum wages, or other such socialistic ideas, becoming so popular especially among the “millennials”?  The answer is they don’t see an economic system that is working.  Unlike our generation and the generations before, where the free market was operating with less government intervention, today they see the result of an economic system where the government continues to meddle in the market and inevitably messes it up.  By way of reference, go back and read the column we did on January 6, 2014 [The Story of a Pencil and the Free Market]That column describes how our economy should be working.

But envision the so-called recovery of the last decade.  For most of it nearly half of the skilled college graduates were unemployed, an unprecedented number.  Today we see 35% of young people between the ages of 18-34 still living with their parents, a record number.  But perhaps most infuriating to the millennial generation is they’re getting paid less than the nation’s median income.  They feel they have failed to be rewarded for their efforts to increase their skill level. 

At the heart of "the recovery that wasn’t" fatal blows were struck from unnecessary government intervention.  A highly respected former CNBC business reporter recently said that Hillary Clinton is talking about building on ObamaCare.  But it’s Obamacare that is causing the lack of employment because small businesses – the engine that drives our economy – are not hiring full time workers because of ObamaCare’s “employer mandate.” 

High corporate taxes is another failed progressive concept.  When Canada initiated a major reduction in its corporate tax rate massive amounts of capital flowed into that country and revenues rose throughout the entire nation’s economy. The idea that the rich should pay more while those less fortunate should be paid for not working is another failed progressive concept from its inception.

Solutions, real solutions, and self worth are found in the concept that rewards should be paid to those who work hard and sacrifice.  It is against nature that those who contribute less should be rewarded more. 

Mark, Bill and John

 

 



 


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