No problems at “our” Walmart

If you wonder why there’s just the average hustle and bustle at your local Maryland Walmart today, there’s a good reason – a court order given last year keeps pro-union protests off Walmart property. But the UFCW keeps trying, encouraging supporters to instead tie up the phone lines in protest.

If you live in Arkansas, Colorado, Florida, Maryland, Ohio, or Texas, we ask that you remain off of Walmart property and tweak your action by calling the store manager on the phone to inform them that you/your group is there supporting #WalmartStrikers rather than delivering anything to the store.

I don’t have to go to Walmart today, but I did have to go to a different store close by Walmart so I took a look around. It’s near a corner where union picketers have stood before so in reality visibility is somewhat better for any who would protest Walmart anyway – although Wendy’s and McDonalds probably aren’t happy about it. Yet today the corner was busy with auto traffic and no protests in sight.

In other areas around the country, though, left-leaning news sites are gleefully reporting protests, including a major one in Washington, D.C.

But Walmart wasn’t taking this lying down, nor were they going to depend on media to share its side of the story. I noticed this commercial played during the football games last Sunday and yesterday.

In reality, Walmart is like any other large company – employees who perform better or do more to improve themselves by taking advantage of opportunities the company may offer tend to advance.

Moreover, the $15 per hour demand by the UFCW smacks of hypocrisy when, as Diane Furchtgott-Roth writes, union employees in other UFCW union stores make far less after years on the job. Perhaps the Black Friday protests should occur at UFCW headquarters.

But what happens if employers knuckle under and pay $15 per hour? Indeed, for many it would be a tremendous raise, but the increased labor costs for those employers would ensure those who survive the immediate wave of layoffs and automation which would naturally take place with the vast wage increase for millions of workers would watch inflation (and a higher tax burden) erode their gains to a point where the process would have to begin anew in a year or two as advocates would demand $20 an hour to keep pace.

You may recall earlier this year the CBO came out with a study that predicted a minimum wage increase to $10.10 per hour could cost at least 500,000 jobs, and perhaps as many as a million. (At the same time, a smaller increase to $9 an hour would only cost 100,000 jobs and have a slim chance of increasing employment.) While the study didn’t document a raise to $15 per hour, it’s likely job losses would be in the millions based on the data compiled.

Until the UFCW looks at increasing wages and benefits in stores they do represent, their targeting of Walmart rings hollow.

Addressing the challenge

Many years ago, when I was a mere political babe in the woods, I volunteered to help out a candidate by the name of Maggie Thurber. At the time, she was running for a full term as Clerk of Courts in my former home of Lucas County, Ohio, having won the office in a huge upset two years earlier. She went on to win that election and one more, plus serve a term as a County Commissioner before leaving politics.

She parlayed that political success into a stint as a radio host and also has blogged for several years at a site called Thurber’s Thoughts, although now that seems to be used as additional material for her work on Ohio Watchdog (a subsite of Watchdog Wire.) And that’s where I pick up the story.

I happened to come across a piece she wrote regarding the “Live the Wage” challenge, something set up by this website. This movement is backed by the same people who connived Maryland into raising its minimum wage earlier this year.

The premise of this challenge was to buy groceries and gas on $77 a week, which was the amount deemed to be left over once taxes and housing expenses are paid. Thurber writes that:

Former Ohio Gov. Ted Strickland gave up. He started on a Sunday, but ran out of money by Thursday, he explained in a column for Politico. He said he skipped meals to save money and ate smaller, less healthy meals.

“Because fresh fruits and vegetables are hard to find at a price within a minimum wage budget, I turned to bread, peanut butter, bananas and bologna more than anything else,” he wrote. “That was what I could find when I took this budget to the grocery story (sic) last Sunday. And that’s why I ate lunch from the McDonald’s dollar menu.”

U.S. Rep. Tim Ryan, D-Ohio, spent his money foolishly, paying $7 for sardines and crackers, $5 for a Burger King Whopper, $2 for a cup of coffee and his “last couple of dollars to buy trail mix,” he explained on his Facebook page.

It’s obvious to me Strickland and Ryan didn’t take this seriously; otherwise they would have done as well as Thurber and her husband did. She bought a week’s worth of gasoline for $44 (using points from her local Kroger grocery store) and spent $82.83 on a basic menu of groceries for the week, with a couple splurge items. As for the leftover money?

We approached the challenge as if we had both lost our jobs and taken minimum wage jobs to get by. Under this scenario, we’d have some items on hand, like paper towels, detergent, aspirin, condiments and corn to make popcorn for snacks.

But with $27.17 remaining in our budget, or going without our two splurge items, we’d be able to purchase those supplies as we needed.

Of course, the banshees came out of the woodwork in the comments section and shrieked that she should live like this for a year or so before talking. Well, these (very well-paid) politicians didn’t even try hard to make it through a week – what does that say about their compassion, let alone their eating and cooking habits?

As I noted above, Thurber expanded on this Ohio Watchdog piece on her own site, which gave politicians a new challenge:

Don’t you think it’s funny that no one ever tries to live like a small business owner for week? To feel what it’s like to try to make a payroll, deal with government forms and mandates, handle local government rules and regulations, deal with happy and angry customers, supervise a work staff, promote your business, do the accounting and somehow find time for family and friends and an actual life outside of work?

One day in the life of small business owner is much more difficult and stressful than trying to live on $77 a week.

That’s the reality of this ridiculousness – and that’s why the whole “live the wage” publicity sham is such a travesty.

I talk about business climate a lot on this site because, as a state, Maryland is far too dependent on one industry – the federal government. In that, it mirrors the city of my birth which is overly reliant on the auto industry. But in catering to the auto industry you at least do things which benefit other businesses around the state, and overall Ohio is a diverse state with several distinct metro areas as well as a significant rural component.

In contrast, Maryland seems to work only toward enriching government and those businesses connected to government by hook or crook. So raising the minimum wage was no big deal to most of Maryland – it’s a world of almost automatic annual raises and the job security one receives when you work for a government which rarely, if ever, cuts itself. People can shoulder that burden more easily along the I-95 corridor.

But when you come out to the forgotten parts of Maryland, a minimum wage raise means jobs lost – there’s no other way around it. There were efforts to waive or slow down the increase for counties here on the Eastern Shore, but they were rebuffed in the General Assembly.

And if you think buying groceries on minimum wage is difficult, just try it being unemployed. That’s going to be the result of these shortsighted policies once the political stunts and game playing are forgotten.

AC Week in review: June 8, 2014

Wouldn’t you know it: I begin a series only to bump it in week 2 because of MDGOP debate coverage. So this will truly be two weeks in review, but I’m sure you really don’t mind.

I begin by asking the question: can America keep making things? I found an interesting perspective on the question and added my own thoughts. But I also found that workers, STEM-based or not, should be flexible and highly-trained. (And while it doesn’t pertain directly to AC, I was pleased that one of our gubernatorial candidates has the same line of thinking.)

In order for our manufacturing economy to succeed, though, we need to have others around the world play fair. Unfortunately, not only China has been caught cheating on trade, with them and other countries threatening up to 500,000 steel jobs, but right here at home one group of American manufacturers is concerned that federal regulators unfairly have them in their crosshairs as well.

Longtime readers know as well that I’m excited about America’s ongoing energy boom, and in this case I look at how manufacturing can benefit, with a little help from regulators. And while the EPA is trying to do away with the coal industry through onerous regulations, Congress on the other hand is trying to rein in that body run amok with accountability and transparency.

I’m sure in the next couple days – since the unemployment rate is always released on a Friday, for weekend analysis – we will get spin on it, but this is another pre-launch piece I wrote last month on May’s unemployment numbers.

*********

On the first Friday of this month, analysts cheered the new low unemployment number of 6.3 percent, a low not seen in nearly six years. Moreover, the economy added 288,000 jobs – although that news was tempered by a labor force participation drop of more than 800,000 workers.

Yet out of those 288,000 jobs, just 12,000 were added in the manufacturing sector. That was “surprisingly weak,” according to Alliance for American Manufacturing (AAM) president Scott Paul. The AAM, an advocacy group backed mainly by the United Steelworkers union, contends that 5.8 million jobs could eventually be created by stopping currency manipulation by China, citing a recent Economic Policy Institute report which called the practice the “primary cause” of our trade deficit.

On a similar front, economist Chad Mowbray, who writes for the Shopfloor blog for the National Association of Manufacturers, detailed a number of “nagging challenges” for American manufacturers, leading off with the weak 0.1% first quarter GDP growth announced last week. (Editor’s note: that number has since been revised to a negative 1 percent growth.) Mowbray added that high marginal tax rates and uncertainty about health care costs could be factoring into the slow market growth.

In all these cases, policymakers in Washington are at loggerheads on how to proceed. A bill to deal with the currency manipulation was introduced last year and has bipartisan support, but mainly from Democrats. Unfortunately, that side seems to be placing more time and effort into trying to increase the minimum wage, which is a political nonstarter and is thought by many, including the nonpartisan CBO, to be a job killer. Republicans seem to be content with introducing bills to tweak around the edges on both tax reform and health care, but know there’s little chance of them advancing through the Senate, particularly six months before the midterm elections.

The situation, then, remains a challenging one. If, as some analysts have cited, the weather played a factor in slow economic growth, that excuse will dissipate in the summer sun. The question of whether the May jobs report was a mirage or portends better things is important, but there’s little doubt that if the manufacturing sector lags behind any recovery it will impede our progress going forward.

*********

It’s been a busy week, but I’ll keep monitoring the manufacturing market.

Plans and schemes for jobs

One recurring theme of this site is my interest in the manufacturing sector, both nationally and regionally. I suppose the realization that much of what we buy is supplied by a nation which points missiles at us and holds trillions of our debt made me consider the need to think a little bit more about self-sufficiency.

In the generations of my 78-year-old father and my last living grandparent, who died at the ripe old age of 90, America built things. Many cite Detroit as an example of where we as a nation once were “makin’ Thunderbirds,” but we made a million other consumer products as well, all over the country. And while the Thunderbird hung on through 2005 – as did my late grandfather – many of those other manufacturers long since had abandoned us for greener pastures overseas where things could be made more cheaply and regulations weren’t nearly as strict. The latter had to be the reason that companies could spend huge amounts to ship products across the ocean in order to bring them back to our market – the market where, in many cases, these same products were once made in factories which sat shuttered and dormant.

That’s why I’m glad to see some of our gubernatorial candidates pay attention to this long-neglected sector. In doing some research for this piece, I found that just one on the Democrat side, Doug Gansler, is making an issue out of manufacturing and doing more than simply giving platitudes in addressing it. I must say some of these ideas are worth discussion and adaptation; unfortunately Doug takes the time to pander to a certain crowd in advocating for the self-defeating ideas of a higher minimum wage and additional mandated sick leave – these would only discourage manufacturers and businesses from locating in this state. Gansler doesn’t quite understand the concept of market forces with some of his proposals, but with some tweaking a few – particularly the apprentice program – could be workable as an expansion of vocational education.

On the other hand, the leader in this arena on the GOP side is Ron George. While he already had a good beginning as far as job creation goes, yesterday he expanded on his existing ideas of rebuilding manufacturing in Maryland – as he pointed out at our Lincoln Day Dinner, “I cannot cut welfare payments unless I have those entry-level, mid-level jobs.” This is what George proposes to do:

The technology and life sciences industries in Maryland have taken off in part because of significant tax credits and a Tech Services tax repeal. By trusting you to use your revenue to enhance your businesses and create jobs, Maryland has become one of the most successful regions in the country for IT, healthcare technology and biotechnology companies.

I’m proposing we make the same investment in attracting and rewarding new manufacturing firms for creating jobs in Maryland. As Governor:

I will lower the Total Effective Tax Rate of new capital-intensive manufacturing firms from today’s current rate of 31.9% to 20% by 2016.

In the short term, I will work with local and county governments to lower property tax rates and with the legislature to exempt equipment from the property tax of manufacturing firms.

By 2018, I will eliminate the business personal property tax, returning stability and certainty to the manufacturing industry.

This proposal is an investment in the perseverance and innovation of Maryland workers. We must bring manufacturing back to Maryland.

While there is an appeal to eliminating the income tax we have to bear in mind that, as currently constituted, revenues from the income tax make up 22 percent of the overall pie, while business taxes make up far less – eliminating them, one could argue, would create enough of a multiplier effect that the other taxes could eventually also be reduced (with prudent spending, of course.) Having to account for the loss of a 22 percent chunk of state revenue is the reason why all of the income tax proposals out there phase themselves in rather than eliminate the income tax in one bite. (Ever notice, though, that tax increases are rarely phased in?)

But there’s also a lot being left on the table through the short-sightedness of the current administration, and while Gansler and his cohorts on the Democratic side are (literally) tilting at windmills for job creation, we can conclusively show that one $3.8 billion project will help a portion of the state succeed long-term. Maryland was one of the first states studied in a new series of blog posts detailing the impact of the energy industry.

And while the API concedes the state isn’t a leader in the production of oil and natural gas, there’s nothing saying we can’t hold our own through a combination of Marcellus Shale exploration in the state’s panhandle, the prospect of more natural gas in the heretofore barely- or unexplored Taylorsville, Culpeper, Gettysburg, and Delmarva (!) Basins, and perhaps oil drilling offshore. Even the idea of testing the waters can have a positive economic impact on a particular area, and one major key in attracting industry is having inexpensive sources of energy. We hear a lot of complaints from industry about the cost of electricity in Maryland, but having more natural gas (and the power plants to use it) would be of assistance in drawing manufacturers.

Now if the candidates can put together a proposal of transportation structure improvements, one which includes an interstate-grade highway north from Salisbury to I-95 (with the cooperation of Delaware) and the completion of the originally envisioned I-97 across the Potomac to meet with I-95 near Richmond to save trucks from having to deal with congestion around Washington so goods could find their way to market much more easily, I’d really be a happy camper. But for now these will have to suffice.

Just as an aside, you just might be hearing a lot more from me on the subject. Stay tuned.

Martin O’Malley’s (not-so) greatest hits – how about a new song?

Returning once again to a familiar role of thorn in the side and burr under the saddle, Change Maryland and Larry Hogan took the occasion of the final legislative session under Martin O’Malley to remind us of his underwhelming record of “accomplishments” over the last long eight years, wrapped up in one release. All we needed was the bow, as Change Maryland remarked that:

  • They broke promises to state workers by diverting $200,000,000 from pension funds to plug their budget gap.
  • They’ve eviscerated local arts funding to hike the film tax credit for Hollywood millionaires.
  • They raided the Transportation Trust Fund then raised gas taxes to pay for mass transit.
  • They hiked income taxes on families, small business and large employers.
  • They blew $125,000,000 of our tax dollars on a health exchange website that still doesn’t work and was never needed in the first place; today, more Marylanders lack health insurance than when O’Malley-Brown took office.
  • More than 73,000 residents have had their health insurance policies cancelled and tens of thousands more have seen massive increases in their premiums and deductibles.
  • They put the teacher union bosses that bankroll their political machine ahead of students, parents and classroom teachers.
  • They’ve badly mismanaged the education budget, as a result inner city schools are falling farther behind, state SAT scores are down and elementary school reading aptitude is flat. And, even the teacher union said their rollout of Common Core was a mismanaged “train wreck.”
  • Their job-destroying tax hikes on the so-called rich and small businesses – those individuals earning $100k or more – backfired, missing revenue projections.
  • Some entry level jobs will pay a little more but there will be fewer of them.
  • There’s a federal investigation into the Anthony Brown Health Exchange but state lawmakers aren’t issuing their findings until well after the primaries.
  • Thousands of employers are now “paying their fair share” in taxes albeit to Virginia and the Carolinas; about 6,500 companies have left Maryland taking with them more than 100,000 jobs.
  • Likewise, more than 31,000 Maryland residents left for more affordable states, taking $1.7 billion each year out of our economy; among these were thousands of seniors on fixed incomes who can no longer afford to retire near their families.
  • It costs you more when it rains and more again when you drive to the beach.

Describing the O’Malley era as one where, “(i)n nearly every quality of life measurement our state is worse off than it was seven years ago… even areas that showed modest improvement came at a horrendous financial cost due (to) Martin O’Malley and Anthony Brown’s mismanagement and one-party rule in Annapolis,” it’s clear that Hogan isn’t too enamored with the last seven years.

But while Hogan strives to “get the government off our backs and out of our pockets so we can grow the private sector, put people back to work and turn our economy around,” we’re more or less supposed to take his word for it. Obviously some of these items he complains about from the outside will be ones he may well find useful when he takes over the governor’s chair. For example, he (or anyone else for that matter) will have to figure out how to backfill the pension funds, live with the increasing minimum wage (which, for all his charms, he won’t be able to get the General Assembly Democrats to rescind), and roll back taxes and fees to previous levels yet keep the budget in balance. That aspect may actually be the easiest because he would set the budget. Unfortunately, we’re stuck with Obamacare for at least the first two years of anyone’s term, and probably longer.

However, I have a prediction for you. If the budget gets smaller – or even if it’s level-funded – you will hear a howling like you’ve never heard before from the special interests, press, and Democrats (but I repeat myself) who will be out marching in the streets against the heartless Republicans. Remember why we had a Special Session a couple years ago? It was because we passed a “doomsday budget” that was “only” $700 million higher than the previous one, and despite GOP objection we ended up raising spending another $500 million. Again, that was with a budget increase! Heaven help us if we actually proposed spending less money!

So those we elect in 2014 need to be ready and be stiff of spine because those Annapolis fat cats are going to come after us. We threaten their existence on the government teat and they know it. Having a $125 million boondoggle of a health exchange isn’t helping, which is why that scandal is being swept under the rug just as fast as the broom can collect the dirt.

In this part of the state we have some opportunities to chip away at the Democrats’ overall advantage. We’ll have to wait until 2018 to win back the District 37A seat – which will be held for the time being by a woman who I predict will have the same reliably far-left voting record as her predecessor – but aside from that we can speak our piece by ejecting two members of the General Assembly who will occasionally vote the right way when they get the hall pass to do so, but can be replaced by two members who we know will stand up for our interests. We can confound the Democrats’ cynical redistricting ploys by elevating Mike McDermott to the Senate and getting the fresh new ideas of Maryland Municipal League president Carl Anderton, Jr. into the House of Delegates.

Changing the state means pulling our weight, and the Eastern Shore can do most of its part by leaving just one Democrat east of the Chesapeake for the next four years.

The exemption

As the Maryland House of Delegates considered a bill to increase the minimum wage statewide a curious exemption was slipped in, a change in language seemingly placed in the bill to benefit amusement parks like Six Flags.

Seeing that, Delegate Mike McDermott tried to add an exemption for another tourist playground: Ocean City.

The amendment would have exempted Ocean City’s seasonal employees – defined as those who work a maximum of 120 days in a calendar year – from the new wage law, instead maintaining the current federal standard of $7.25 per hour. Said the Delegate:

“Prince George’s County wisely decided that locally this is what they needed to do. Everyone across the state is dealing with their own issues and everyone is dealing with their own different unemployment rates. (Counties) should be able to decide for themselves whether it’s higher or whether it’s lower.

We struggle right now keeping these jobs available for these kids… The lower shore is not recovering; the unemployment rate is still soaring… Our Ocean City businesses will lose out to competition in Delaware with Bethany and Rehoboth Beaches and to competition in Virginia and North Carolina. Ocean City is our world class resort and this state’s premier destination. The revenue from Ocean City paves a lot of roads in Baltimore City; the revenue from Ocean City does a lot for the state of Maryland.

(snip)

If you can see it for a sector like Six Flags, or Jolly Rogers…if you can capture a vision for how [minimum wage] impacts that industry…Can you not see how that impacts an entire region like Ocean City?

(snip)

This is about creating an atmosphere where people can still afford to come and the employers can still afford to keep people there.

Needless to say, McDermott’s argument fell on deaf ears, as the amendment failed on an 89-47 vote. The bipartisan support for the amendment included six Democrats (Bromwell, Conway, James, Kevin Kelly, Minnick, and Wood) and all 41 Republicans who voted (Cluster and Frank were absent.) The original amendments to exempt Six Flags and other like businesses were added at the committee level and not through a floor vote, including one by committee Chair Delegate Dereck Davis of Prince George’s County.

But as the process goes on, it appears low-wage Marylanders will get a raise come January whether they deserve one or not, which probably means more layoffs than normal after the holiday season.

Of course, McDermott’s amendment was nothing more than symbolic because there wasn’t much of a chance of it passing anyway. One thing it did, though, was give local Delegate Norm Conway a chance to vote against the minimum wage bill on that particular amendment. It wouldn’t surprise me if he voted against the entire bill since it’s an election year and he needs to look business-friendly to the good conservative folks on the Shore – surely his union supporters can give him a hall pass since the votes will likely be there. It’s just another example of the BOHICA form of government a state which finds itself in yet another budget shortfall will enact upon its citizens.

No minimum of debate

I noticed this week that the Maryland Reporter website had competing views on a statewide minimum wage increase from longtime Maryland political observer Barry Rascovar and from Benjamin Orr, who heads the Maryland Center on Economic Policy – one of those reliably leftwing advocacy groups with an innocent-sounding name. Rascovar warns about the “law of unintended conseqences” in his piece while Orr would like to have his cake and eat it too by also increasing Maryland’s Earned Income Tax Credit (EITC). I don’t claim to be an economic expert, but the EIC seems to me a handy method for wealth transfer since people using the EITC can receive a larger refund than they actually paid in taxes – instead of zeroing out tax liability, they receive additional money above and beyond a rebate on what the government originally confiscated from their checks via backup withholding.

And the reason this EITC change is important to Orr is the reason he doesn’t state – an increase in minimum wage earnings for a single person could push them over the limit to claim the EITC. Let’s do some simple math.

According to the IRS, for 2014 the EITC phases out at an earned income of $14,590 for a single person, so someone who works 40 hours a week at minimum wage isn’t going to qualify anyway. They would have to work fewer than 38.7 hours a week as a single person to fall under that threshold. Increasing the minimum wage to $10.10 per hour means the person could only work 27.7 hours a week before earning their out of the free government handout – obviously the MCEP wants to keep the goodies flowing.

Obviously being married with a non-working spouse would increase the income limit, but making minimum wage in such a situation makes the couple eligible for a total of just $587 between the state and federal EITC. On the other hand, raising the minimum wage puts the married couple over the threshold as well, thus Orr’s argument that we need both. But I think we need neither.

Raising the minimum wage may be good for the small number of workers who would be swept up in the eventual, phased-in increase, but it will be bad for those who would be considered working class but lie just beyond the $10.10 hourly threshold. No one is necessarily going to give a raise to the factory worker who makes, say, $14 an hour just because the minimum wage went up, but those who can still afford to employ workers will have to raise their prices to cover the increased cost of labor. The Dollar Menu at McDonald’s will have to become a $2 menu sooner or later. How does that benefit the middle class or those on a fixed income?

In a time when the employment market features dozens of candidates for each open position, forcing a wage increase is counterintuitive. Conversely, in those few truly booming areas such as energy-rich North Dakota or the Permian Basin in Texas, the market has determined a much higher minimum wage.

Closer to home, choices will have to be made by consumers who are being pinched by price increases everywhere they go, and prudent families may have to reduce their budgets for fun things like vacation or eating out. Using Salisbury as an example, we just lost another sitdown family restaurant this week when Mister Paul’s Legacy suddenly closed up shop. (This puts a dent in our Republican Club as well, as we’ll have to find a new location for our Christmas party. I also recall attending meetings of the Wicomico Society of Patriots and other fundraisers there as well.) Now some will blame the intrusion of national chain restaurants such as Buffalo Wild Wings or Longhorn Steak House (to name a couple which have opened here in the last two years) for the demise of this locally owned eatery, and they may have a point because they may be able to weather a localized wage increase better by raising prices across the board. Surely we pay for a little extra here at these chains for the people who work for them in areas where the wage level is higher. But I contend the overall pie is shrinking because fewer have jobs and increasing the minimum wage will further erode our local job market.

It’s all a question of value to the employer. One offshoot of the recent drive to unionize fast food workers and get them a $15 an hour wage was learning about automation overtaking that industry – for example, at Royal Farms you enter your order on a kiosk rather than speak to a counter person. By the same token, going to Walmart now can be done with little human interaction since the local stores have adopted self-serve checkouts. On a national scale, Applebee’s is bringing tablets to the table. While business has always trended toward automation and other ways to drive up efficiency, increasing the minimum wage may be a tipping point for new technology which replaces the fast-food worker or even wait staff.

In a perfect market-based world, people would be paid exactly what they are worth, a number determined by the value an employee’s labor brings to the employer. I have jobs for which I receive a wage which is agreeable to both me and the employer, and I have this enterpreneurial outlet which manages to pay for itself but is otherwise a loss leader, as I use it to showcase my writing talents. (How do you think I earned some of my paying jobs? And hitting the tip jar or advertising on this site is always encouraged.) Some in this avocation take the work even further than I do because their mortgage depends on it. Instead of a single employer, those of us who write in this arena depend on building a market share and making it economically viable somehow as writers, or as consultants, or in some other manner.

It’s all about what the market can bear, and the problem with the government putting its finger on the scale is that it makes a lot of hard-working people lose economic ground to benefit a select few. Until recent years, we had a thriving middle class which was upwardly mobile on a large scale, living a lifestyle comparable to those among their parents who were well-off. Raising the minimum wage simply accelerates the vicious cycle in which we are now trapped, for those who are deserving would earn their way off the minimum in due course anyway – they’re being forced, though, to carry a lot of excess baggage with them.

Let the market work its magic.

Reaction to O’Malley’s last State of the State

Three of those gentlemen who would like to deliver the next State of the State address in 2015 put out remarks in reaction to the current occupant of Government House and what he had to say yesterday afternoon. These are in alphabetical order, by the way, not necessarily in order of preference.

David Craig called the O’Malley era a “sad legacy” in his brief statement, one which focused on the failure to implement the state health insurance exchange but the success he had in implementing higher taxes and fees:

The O’Malley-Brown years leave a sad legacy for those interested in basic government competence, fiscal responsibility and individual freedom.

While Governor O’Malley acknowledged the failure of his Administration and Lt. Gov. Brown to implement Obamacare, there are important facts missing among the many statistics he likes to choose. The Administration has a long way to go on providing transparency on health care including the number of how many consumers are obtaining actual coverage, the number of people dropped from private plans and the total cost.

We have heard for several years now the growing amount of money in so-called ‘cuts’ to the budget, when in fact the budget has grown $10 billion during the O’Malley and Brown terms. Over 70 tax, fee and toll increases are hurting the economy, reducing employment compared to other states in the region and is taking more money for more government.

Similarly, Delegate Ron George attacked O’Malley’s economic record, calling it a “burden on job creation”:

Never has a governor so boldly claimed budget cuts, economic growth and a shrinking executive branch in the face of such clear evidence against. Small businesses have seen their taxes rise tremendously under the O’Malley/Brown administration. Now in 2014, he is burdening job creators with the rain tax, implementation of Obamacare and a forced wage increase.

The O’Malley/Brown administration has seen the relocation of thousands of small businesses and tens of thousands of taxpayers due to a hostile state government. Our mom and pop shops, who employ the majority of our workers, are already struggling to stay open. We must focus on expanding opportunities for entrepreneurs and technical training for our unemployed to protect and grow our middle class for generations to come.

More bluntly, Larry Hogan called O’Malley’s tenure one of “nothing more than lip service” to working Marylanders:

Year after year, this governor has provided nothing more than lip service to hundreds of thousands of hard working Maryland families who look to their governor for leadership. Today was no different. We heard nothing about how the O’Malley-Brown administration plans to turn our economy around, nothing about attracting job creators to Maryland, and no apology to the tens of thousands of Marylanders who have not been able to participate in Maryland’s healthcare exchange.

Instead, what Governor O’Malley delivered today was pure fiction. The Governor continued his perennial claim of spending cuts when the simple fact is the O’Malley-Brown administration has increased spending by 33 percent: from $29.5 billion in their first year to $39.2 billion proposed in their final year.

O’Malley talked a lot about the middle class but, under this administration, the middle class has never felt more pain. The O’Malley-Brown administration paid for their excessive spending on the backs of the middle class. Forty consecutive tax and fee increases – record sales tax increases, the massive gas tax increase, and higher fees on nearly everything – have hit the middle class pocket book the hardest. Their taxes have gone up, their jobs have disappeared, and they now pay more than ever to heat their homes, commute to work, and feed their families.

Marylanders deserve better.

These themes and more were woven into the “official” Republican response, which came this year from Senate Minority Leader David Brinkley.

But all of them – with the exception of Ron George, who briefly touched on a couple ideas he had – did a great job of identifying the problem, yet didn’t pose any possible solutions. Having the longest space in the official response, Brinkley did well speaking to the issue with O’Malley’s signature initiative this year of raising the minimum wage, but what is really needed are some actual business people testifying that if the minimum wage goes up, they’ll have to reduce staff and raise prices to consumers. What’s not generally mentioned is that the process of raising the minimum is envisioned as a multi-step program, as the $10.10 per hour wouldn’t take effect until July 1, 2016. (As the bill is written, the wage would step up in 95-cent annual increments beginning July 1, 2014. However, after that point the intention is to index the minimum to inflation so it would automatically go up each year at a slightly faster pace – the bill rounds it up to the nearest penny.)

The other initiative items O’Malley touched upon in his remarks were “advancing” universal pre-kindergarten across the state and revamping domestic violence laws, both of which also happen to be key platform planks in his lieutenant governor’s campaign. My question on pre-K, though, is twofold: what sort of “investment” are we talking about and is it going to be worth it? Studies of the effects of Head Start on young students show that the advantages gained in such a classroom environment evaporate quickly, at best by the time the child reaches third grade but perhaps even after first grade. But it sure would create a lot of union jobs.

Most disappointing – although I can’t say I’m surprised after seven years of this mismanagement at the state level – are the two most fundamental misunderstandings uttered by our state’s chief executive.

Here’s the first one:

We’ve lost sight of how our economy works when it is working well.

Prosperity doesn’t trickle down from the top.

It never has.

It’s built from the middle out — and from the middle up.

It was O’Malley’s Democratic fellow, President John F. Kennedy, who popularized the phrase “a rising tide lifts all boats.” Using the ocean as an analogy, O’Malley’s argument would seem to be that the ocean rises when the streams which feed it increase their inward flow. Indeed, this is true to some extent, but remember those streams are replenished by the rain which falls from above, as it also does over the ocean.

Obviously there are some people in the world who would be happy with a middle-class existence. But I haven’t seen the lottery yet which succeeded on the promise of $50,000 a year – people aspire to wealth, although obviously with the caveat of not having to do more than purchase a ticket to secure it. The odds are vastly better that someone who works hard to enact his entrepreneurial ideas will become wealthy, dragging many of those who simply aspire to be middle-class upward with him or her through being employed in the enterprise.

Unfortunately, the path to becoming middle-class seems now to be most readily available through government. I have a friend who has been an entrepreneur; unfortunately, his ventures haven’t been as successful as he would like. His new job is with a state agency – yes, the pay is decent but the problem his conscience wrestles with is one of being a taker rather than a creator. There are many fine federal, state, and local government workers out there but all of them share one thing in common: they’re paid by revenues mainly collected from the private sector. The O’Malley legacy is one of absolutely brutalizing the private sector producers, who can’t trickle anything once the state is through with them.

Here’s the second issue – stop me if you’ve heard this one before:

Seven years later, we are not just One Maryland. By many measures, we are Number One Maryland.

And by many other important measures, we are number 24 or 41 or 44 Maryland. But my contention is that the state is not One Maryland, but really at least four: the western panhandle, which combines rugged beauty with the potential to tap significant energy reserves; the I-95 corridor where most people live, a study in contrasts between rich and poor, educated and streetwise, and all shades in between; southern Maryland, which is the quickly evolving bedroom community and playground for those who work in government; and the Eastern Shore, where agriculture and tourism have to co-exist, doing so more or less peacefully. Making decisions for one region tends to adversely affect the other ones.

But I think “One Maryland” to Martin O’Malley is his code to continue the top-down, Annapolis-knows-best leadership style for which his administration has been known. We’ve had the septic bill, the rain tax, educational maintenance of effort requirements, and dozens of other instances where counties serves as little more than lines on a map because their authority is folded under the Annapolis bureaucracy.

I understand the Republicans only had a limited time to respond, but there was so much we left on the table in replying to Martin O’Malley’s message. I’m looking forward to Republicans laying out their plan for Maryland, since I’m confident conservative leadership can really move this state forward.

An aggressive approach

Say what you will about the Maryland Liberty PAC, but it appears they will maintain an aggressive approach to the upcoming General Assembly session. They and an affiliated group called the Maryland Pro-Life Alliance are already sounding the alarm against prefiled legislation.

This is in response to a minimum wage bill prefiled by Delegate Keith Haynes of Baltimore City, which would more than double the state’s current $6.15 minimum wage (which is superseded by a higher federal law) to $12.50 per hour. Efforts to raise the minimum wage are nothing new, though – this bill from 2013 didn’t even get a committee vote.

My guess is this bill meets the same fate; however, there is a move in Montgomery and Prince George’s counties to create a regional minimum wage with the District of Columbia. This isn’t a surprise given the far-left orientation of the local governments there. This may also be a way of staking a position so far out of the mainstream that a bill like last year’s, which increased the minimum wage in several steps, looks like a common-sense compromise. In either case, though, the effect on small Maryland businesses would be devastating.

But while the Maryland Liberty PAC wants HB72 killed, their affiliated Maryland Pro-Life Alliance group is looking once again to get the Pain-Capable Unborn Child Protection Act (PCUCPA) to receive a committee vote.

The “Mac” in question is State Senator Thomas “Mac” Middleton, who the Pro-Life Alliance claims “completely stonewalled” the bill last year. They note that:

Right now, your Maryland Pro-Life Alliance is running ads to pressure Senator Middleton in his district.

He alone holds the key to allowing for an up or down vote on SB-34 in the Senate Finance Committee.

Of course, not only is this a call for pro-life voters in his district and beyond to contact Middleton, but an appeal for money to run ads in his State Senate district. At this point, no Republican has filed to oppose Middleton.

The bill, SB34, was prefiled this year by Senator Ed Reilly. At this point, no companion House bill has been introduced. If and when one is introduced, it will be interesting to see whether Delegate Ron George signs on as a co-sponsor as he’s running for governor. I guarantee if he doesn’t, the Maryland Pro-Life Alliance will be on his case despite an impressive pro-life resume and support.

It’s an aggressive approach, and one which doesn’t have fans everywhere in the Maryland Republican Party. But it’s said that in war the aggressor sets the rules, and we need to change the playbook.

The lesson of ‘Julius’

Remember last year when the Obama campaign came up with the idea for “Julia”, a fictional woman who was supposed to represent how Obama made life better for women everywhere? (You know, that phony, made-up ‘War on Women’ and all that.) I wrote about this about a year ago.

Well, one year later the good folks at the Competitive Enterprise Institute came up with the idea of “Julius”, a black worker affected by Big Labor and its policies and politics. It’s well worth the three minutes of your time to watch. I’ll wait.

While the account is fictional, the problems being caused by these policies are not. Yet the liberals never seem to learn – they seem to think that just one more increase in the minimum wage will do the trick, or one more revenue hike will lead to the proper “investments” of taxpayer money. And the golden goose will never stop a-layin’.

All these ideas, though, defy logic.

For example, the idea of paying just minimum wage is that of giving someone who doesn’t have a high skill level and is not all that valuable to the employer the amount which has to be given by an artificially-created law which has no relation to the actual market. If someone’s labor is worth $7.25 an hour to the company and no more, well, then that person will be a minimum wage hire. But if the minimum wage is $10 an hour – and they’ve tried to do this in Maryland on a couple of occasions – there’s no reason to hire someone who’s still only worth $7 or $8 an hour to the compamy because it would be unprofitable in the long run. That’s the point made in the video. (One thing not mentioned is that the reason unions push for minimum wage increases is because many labor contracts are pegged to maintaining a salary point a certain percentage or dollar figure above the minimum, which means automatic but unearned and non-negotiated wage increases for their workers if the minimum wage goes up.)

But if there were no minimum wage, all it would mean is that the labor market would find its level. Arguably, this is one problem which is blamed on illegal immigration and the penchant to work on a cash or “under the table” basis – they could be happy with $5 an hour if taxes aren’t taken out and there’s no need for a Social Security number.

Taken to its opposite extreme, what if there were a maximum wage and no one could work for more than, say, $20 an hour? What incentive would anyone have to succeed knowing they could only reach a certain level, and what enjoyable parts of life would we have to do without given the artificial limit of $800 a week for 40 hours of labor? That’s only $41,600 a year before taxes. To me, having a minimum wage is just as unrealistic as having a maximum one – and don’t get me started on the idiocy presented by the so-called “living wage.”

Without a minimum wage, would employers try to take advantage and pay, say, $5 an hour? (Ironically, that was my hourly wage on my first job in 1986 – one Lincoln per hour.) Some would, but in time these low-level employers would find that the labor pool willing to take that kind of wage would leave a lot to be desired, so they would have to increase their offerings to find better workers. On the other hand, in places where labor is in high demand, like the oil-rich portions of North Dakota, even workers at menial jobs get double-digit hourly pay. (Incidentally, North Dakota is a right-to-work state.) Once the employment market levels out there, that boom will slow down and wages will come back to a particular supportable level for both employers and employees, with those who work in the oil fields remaining on the top of the wage totem pole because their work is more valuable to their employer than a guy flipping burgers at the local fast food joint, as it should be.

But there is one entity which will never settle for the minimum wage, and that’s government. Living in a state which seems to be the leader in one category above all else – tax and fee increases – it always seems as though Big Labor is right behind them every time the state wants a little more out of our pockets. Perhaps this is more understandable in the case of increasing the gas tax, as those unions involved in construction moaned and complained that we hadn’t increased the tax in over two decades. (To which I replied: so?) Supposedly, the additional jobs created by building new infrastructure – even as frivolous as new light rail mass transit lines will eventually be – will assist in jump-starting the state economy.

Again, however, this is a case of gaming the market and not allowing it to seek its own level. Granted, to use the example above, we do need to improve our roads and transportation infrastructure but there were other methods of doing so and more productive ways to spend the money. Nor does this count the other tax increases we have endured over the last half-decade on income and sales taxes, additional fees, and various other methods of vacuuming our hard-earned dollars out of our greedy little fingers and into the deserving coffers of the state for “investment.” Instead of each of the six million or so Marylanders making their own decisions on where to spend, they get part of their check confiscated from them so the state can transfer wealth from flush to impoverished, taking a decent-sized cut for themselves in the process and producing nothing. Julius is the one left poorer for it.

In the video, Julius reaches what’s supposed to be his golden years without a pension because his company was driven to bankruptcy by the union he didn’t belong to. Unfortunately, the creation of promises over a generation – without the actual funding to back them up – are poised to harm both union and non-union retirees alike. Public pension funds nationwide on the aggregate have a funding gap between assets and promised benefits estimated at around $1,000,000,000,000. (That’s one trillion dollars, or about 3/10 of our annual federal budget.) While that pales next to the unfunded liabilities of Social Security and Medicare, this is still a vast sum which in all likelihood won’t be made whole without rampant inflation or a significant devaluation of the dollar.

Perhaps it’s a good plan for those under 50 to plan on a retirement – if leaving a job is even a possibility in that distant of a future – without either Social Security or Medicare because neither can survive in their present form. Simply put, they aren’t taking in as much as they are putting out. A half-century or more of promises and IOUs was never addressed because people thought the good times would last and last while the bill never arrived. That simply defies common sense, and here’s your invoice.

We don’t know what happened to “Julius” but I’m sure a lot of people can guess the rest – he dies a pauper, having done things the way he was told to do and getting no reward for it because other special interests figured out how to prime the political pump and have the system rigged in their favor. This all can be changed, but it will take a long-term concerted effort and there will be some bitter, bitter medicine to swallow in the interregnum.

As the son of a former union worker whose plant was a casualty of the recession of the early 1990s and a mom who worked for over 20 years to help support the family, I can understand just where this was coming from. My mom might not agree, but I hope she has a happy Mother’s Day nonetheless.

Protesting Jim

Unfortunately I could not be there to see this with my own eyes, but both published and eyewitness reports indicate that Salisbury Mayor Jim Ireton attended a small protest today at the local office for Congressman Andy Harris.

The reason for the protest was to show support for a document called “A Contract for the American Dream,” with the title obviously a play on the Republicans’ “Contract With America” from 1994 and 2010.

So let’s assume Jim Ireton is foursquare behind the document – what is he backing?

It begins with a call to rebuild America’s infrastructure. That’s commendable, but they go beyond roads, bridges, and utilities in calling for “national and state infrastructure banks.” To me, that’s code for more federally- and state-controlled land, whether through outright acquisition or regulating usage. Money should be allocated for these tasks, but preferably at the local and state levels and for meaningful, development-friendly projects like expanded highways or new utility lines – not wasted on items like public transit or bike paths few use.

The second point: creating “21st Century energy jobs” – in other words, continue to subsidize expensive and inefficient “renewable” sources at the expense of proven fossil fuel technology that we have in plentiful supply. When the market is ready, someone will tap into those renewable sources. Jim, it’s not time for that yet.

Thirdly, we’re asked to “invest” (read: throw money at) public education. So much for educational choice, right? And the idea of “universal preschool” fits right in with a plan for indoctrination. It makes me wonder what their definition of a “high-quality” teacher is. Mine would be one who teaches critical thinking instead of regurgitating the latest propaganda.

The fourth point is “Medicare for all,” which equates to a single-payer health care system. Lefties have been pining for this for years, always saying we’re not in step with the rest of the industrialized world. So where do those who can afford it come to get medical care again? (Hint: it’s not Cuba.)

Idea number five is to “make work pay;” in other words enact a so-called “living wage.” We have a “right to fair minimum and living wages,” they say. What part of the Constitution was that again? It’s not in my copy. We’d be better off abolishing the minimum wage, since those who own businesses know all about working long hours for little pay. If a worker is only producing a net three dollars an hour for the company, that’s what they should be paid.

Sixth, they want to “secure Social Security” by – guess what? – raising taxes on the rich. They would eliminate the tax cap on earnings so every penny of what one earns would be taxed. How about giving us all a break and beginning to sunset the program instead?

The “soak the rich” philosophy continues with item number seven, which would be to not just eliminate the 2001/2003 Bush tax cuts but enact a “millionaire’s tax.” We see how well that works for Maryland, don’t we?

Number 8 continues the class warfare by calling for a .05% tax on each Wall Street trade, which supposedly would raise $100 billion a year. Besides the fact that we’re talking chump change in this era of trillions, the effect of such a tax would be to destroy billions in wealth as the stock market plummets in reaction to the toll. Of course, when the desired amount is not raised they’ll simply increase the tax, continuing the vicious cycle.

Ninth in the order is bringing the troops home. I can agree with that in part – there are a lot of countries we don’t necessarily need to be in. But we also need to give those troops we leave in the field the tools and strategy for victory. If we want to rout the Taliban, well, let’s stop playing around and throw out the silly rules of engagement which bind our hands. The enemy has no rules of engagement, why should we?

And finally, they call for restricting free speech in the most “catch-all” of bullet points:

We need clean, fair elections – where no one’s right to vote can be taken away, and where money doesn’t buy you your own member of Congress. We must ban anonymous political influence, slam shut the lobbyists’ revolving door in D.C. and publicly finance elections. Immigrants who want to join in our democracy deserve a clear path to citizenship. And we must stop giving corporations the rights of people when it comes to our elections and ensure our Judiciary’s respect for the Constitution. Together, we will reclaim our democracy to get our country back on track.

So let’s follow this to a logical conclusion – everyone here gets a vote whether they’re here legally or not (and will be rewarded for breaking the law to get here), elections will be publicly funded (except when a candidate chooses not to follow those rules – *cough*Barack Obama*cough*), lobbyists won’t be allowed but “czars” will, and corporations will lose their right to free speech but unions won’t.

But the last sentence of the document provides the fatal flaw, and one needs to ask Jim Ireton whether he really believes this.

Our nation is NOT a democracy – it is a republic. If we were a democracy, we would soon be defunct under the tyranny of the majority. As the old parable goes, a democracy is where two wolves and a sheep vote on what’s for dinner.

While Jim Ireton had the majority of those who could be bothered to vote in the 2009 Salisbury city election, that was by no means a clear mandate. And having a so-called “contract” signed by 125,000 Americans is invalid in the face of millions of voters who desired the more conservative direction Harris and the Republican-controlled House of Representatives have attempted to push government toward. I’ll see the backers of the “Contract for the American Dream” and their puny 125,000 total nationwide and raise them the 30,000 additional citizens here in the First Congressional District who gave Harris his mandate by voting for him. If Frank Kratovil had 125,000 votes he would have only lost by 30,000 instead of 35,000.

Shoot, the 9-12 rally back in 2009 did better than that.

But if this is what Jim Ireton truly stands for – a group of items which would effectively federalize much of government and make princes paupers by taxing the producers of society – then we really need to find a conservative challenger for him in 2013. He’s leading Salisbury in the wrong direction, and real help needs to be sent on the way.