Good call on minimum wage

Published 9:37 pm Thursday, January 22, 2015

An upside of having a Republican-controlled General Assembly is a quick death of populist legislation to raise Virginia’s minimum wage.

Voting along party lines, the Senate Commerce and Labor Committee on Monday killed a bill to raise the minimum wage — set at the federally established $7.25 per hour since 2009 — to $8 an hour and then gradually to $10.10 an hour. Similar legislation in the House appears unlikely to fare any better.

Republicans are on the right side of this emotional issue, which too often is portrayed as “pro-worker” or “anti-worker.”

In fact, an arbitrary, government-mandated increase in private-sector wages would hurt many of the low-income workers it is designed to help.

A higher minimum wage does nothing to generate the additional revenue that businesses need to pay their workers more. Conversely, it squeezes profits, causing employers to eliminate jobs and reduce spending in other areas that stimulate the economy, in order to make ends meet.

In the case of the public sector, governmental entities would simply raise taxes to cover costlier payrolls, sucking discretionary income out of the economy.

Not surprisingly, business groups lined up in opposition to the legislation: the Virginia Chamber of Commerce, the Virginia Farm Bureau Federation, the Virginia Hospitality and Travel Association and the National Federation of Independent Businesses.

“This legislation disproportionately hits small-business owners,” said Nicole Riley of the NFIB. “Many have told us that it would lead to them hiring older and more experienced workers and would not help those who the minimum wage was for — the young, those with less skills and experiences.”

Virginia’s economy is picking up steam, evidenced by state General Fund revenue increasing 13.1 percent in December from the previous year, mainly driven by growth in payroll withholding. Halfway through the fiscal year, total tax collections are up 6.8 percent, more than doubled the forecasted 3.1 percent growth.

The main drivers of the revenue increase, state officials say, are the state’s individual income tax and the corporate income tax.

A higher minimum wage would be a sure way to kill the momentum.