Obama’s living wage plans fall short

During the 2014 State of Union this past Tuesday, Jan. 28, President Obama discussed the problems facing Americans and some solutions, often using stories of real people just like you and me. But what stuck out more than any story was his executive order that would require federal contractors to be paid a minimum of $10.10 an hour.

Afterwards he expanded, urging Congress to adopt a wage bill in the works, claiming: “This will help families. It will give businesses customers with more money to spend. It doesn’t involve any new bureaucratic program. So join the rest of the country. Say yes. Give America a raise.”

Whoa. If there’s one thing all Americans could hope to agree on right now, it’s that President Obama is a fantastic orator. I’m sold if it works that way, but Obama’s already moved on to his next point. Like Jordan Belfort (Leonardo DiCaprio) does to the audience so many times in “The Wolf of Wall Street,” Obama has taken us back to the entertainment when I want to know how they’ll manage the economic magic of solving the minimum wage problem, and more importantly, McDonalds.

I’ll explain. Due to the nature of federal policies — like food stamps, Medicare and tax returns — taxpayers are subsidizing fast food restaurants by providing for fast food workers’ missing wages because the wages they are provided are not enough for basic needs like food, water and shelter. Fast food restaurants make millions as a consequence of low wages, and the American taxpayer makes up the difference.

Understandably, I’ve got a beef with the Big Mac. Sometimes lawmakers agree to subsidize a group like farmers or veterans. Whatever your opinion on it, that’s democracy. I accept it. In this case, however, no one voted to subsidize the McRib. Next up, subsidized ciggarettes.

The solution is a mystery. Democrats claim the minimum wage hike is one way to fix this: Give cash-strapped individuals money and, plot twist, they will spend it. This then boosts the economy. Republicans argue that it won’t work, as the costs will be passed onto the customer. The employer will just up the prices, fire people or make everyone work fewer hours. Other companies will also respond by increasing pay to their non-minimum waged employees. Inflation will occur. The very group we’re trying to help will be hurt and the subsidy continues. Trying a corporate tax will do much the same, they argue.

It’s naïve, I guess. Making a corporation cut their profits or pay a CEO less is like trying to force a human to not breathe air. Corporations exist to make profit. It’s their raison d’être. Perhaps we need to experiment: Can people propel the economy by spending faster than the corporations work to reclaim profits? Then we’ll know if the democrats or the republicans and the respective economists are right.

I have no idea. I wish I knew. I wish someone much more knowledgeable than I on the subject could run some tests without running the risk of crashing the U.S. economy. The whole thing is making me suspect that economics is a game of creating a market model that allows the math and charts to argue for your favored political view. Next time you make a speech, Mr. President, please include some footnotes. I want them to be as convincing as your rhetoric.

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