‘Living Wage’ Bill Introduced in South Dakota Legislature

Well, Senator Tom Katus (Dist. 32) has introduced that “living wage” bill he promised Saturday.

SCR 3 says that

state agency, any municipality, or any other unit of government which offers a tax break, a grant, or other subsidy using state and local tax dollars to require any business which employs more than ten employees as a condition of receiving such governmental assistance to pay its employees at least the same wages and to offer its employees health benefits comparable to those the state agency, the municipality, or other unit of government supporting the new business development offers to its entry-level employees.

I wonder how prolific “tax break, a grant, or other subsidy using state and local tax dollars” situations are. With TIFs and numerous other smaller tax breaks and incentives, I would imagine it’s fairly widespread.

I suppose it’s a sad reality that if you accept government money, you accept the government strings that come with it. So it’s not as egregious as a blanket mandate on all businesses would be.

But I think this is the wrong message for the government to send to the business community, and the wrong attitude for the government to take.

So how do we define what a “living wage” is? I might say it takes $40,000 a year to properly live. Another person might say you can do it on $20,000. Still another might say it takes $120,000 to constitute a “living wage.”

This bill defines that loosely as “the same entry wage and health benefits standards as the governmental entity supporting the new business pays and gives its entry-level employees.” So does this mean that every time this government agency gives it’s employees a taxpayer-funded raise, the business is required to give it’s employees a raise? Every time the government agency provides a new taxpayer-funded health benefit, the business is likewise required to add this benefit for their employees?

While the government can essentially increase it’s revenue at will (tax hikes), it’s not always so easy for businesses. Yes, they can raise the price of their goods or services…but if their competition isn’t also raising their prices, guess who’s going to get all the customers, and who’s going to go out of business?

Will this keep businesses from coming to or opening offices in South Dakota, if they know they might have to pay $2.00, $3.00, $4.00 an hour more than they otherwise might–especially if such a difference would move them from the green into the red?

And what if the employee’s labor is only bringing $7.00 an hour in revenue to the business? Can the business afford to pay $11.00 or $12.00 an hour (Katus mentioned a figure of $11.00 and change on Saturday) plus benefits when his employees are only bringing $7.00 an hour in revenue into the company?

And how long is this in effect? Is it only until the “tax break, grant or other subsidy” is exhausted, or is it for the life of the business?

When you add it up, is the “tax break, grant or other subsidy” that the business is receiving from the government going to add up to be worth potentially paying out several more dollars per hour than they might otherwise pay? Than the employee’s labor might otherwise be worth?

And if the business is receiving a continual subsidy from the government, and if the extra wages are equal to the amount of this subsidy, then it essentially becomes the government subsidizing a private employee’s wages. It becomes more wealth redistribution, since taxpayer dollars are being taken from some taxpayers and given to another taxpayer.

You might be able to make the case that an employer, based on a healthy profit margin, morally should be paying a higher wage because his valuable employees are contributing to that healthy profit margin.

But morally should and legally should usually part ways when no one is being hurt or deprived; morally I should tell my children I love them regularly, but should we pass a law to guarantee that? And since an employee and employer (unless there’s government interference) mutually agree to a wage, and an employee is free to leave and go work somewhere else, it can’t reasonably be argued that he’s locked into a system of deprivation like a slave or serf.

It’s wrong for government to be in the business of placing value on the labor of an individual who isn’t doing work for the government. The proper parties for establishing the value of labor are the employer and the employee who accepts a certain wage to work for a business. If the employee wants more money than an employer will pay, he can go somewhere else for a job. If the employer needs the labor and expertise a job candidate offers, and he needs it bad enough, he may have to pay a higher wage to get the candidate to agree to work for him. That’s how things work in a free market–and in a free society.

This bill is fundamentally wrong and un-American. America was and is based on the idea of limited, minimal government. It is also based on a free market, the freedom of a business to determine the value of labor, and the freedom of people and businesses to negotiate willingly with one another.

This bill uses the power of government to squelch that freedom and force a business to pay compensation based on what the government, which is not involved in the operation of the business, says is right and just and fair.

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