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June 2012
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TACTIC Dems' minimum wage bill not a serious proposal

Last week Kentucky's Democrat-controlled House of Representatives passed a bill to increase the state's minimum wage by roughly 40 percent over the next three years. The measure calls for increasing the bottom wage from the current $7.25 an hour to $10.10 an hour in three consecutive 95-cent increments.

The bill, which mirrors one advocated nationally by President Obama and congressional Democrats, is not likely to become law in Kentucky or nationally. It's a political exercise.

Democrats facing tough fall elections are advancing the measure because it polls well. Even for someone making more than minimum wage, say $8 an hour, the idea represents a 25 percent raise over the next three years. In Kentucky, about 400,000 people fall in the $7.25 an hour to $10.10 an hour range that would see some measure of raises.

It's a safe bet that if the proposal were instead to raise the pay of legislators, or public employees, or other people whose pay is supported by taxpayers by almost 40 percent, the idea would not poll so well. That's human nature. It's a matter of whose ox is getting gored.

Kentucky's House Democrats know well that the bill will probably expire in the Republican-controlled Senate. But that's the real point of the effort. It is to manufacture a political controversy that can be converted by incumbent Democrats to try to depict their fall GOP challengers as uncaring about people at the low end of the wage scale.

It's kind of ironic that House Speaker Greg Stumbo, responding to Senate criticism of the measure, accused Senate Republicans of "playing politics" with the bill.

It would be great if we could all, regardless of income, vote ourselves annual double-digit pay increases and not face any consequences. But the economy doesn't work that way, particularly these days, when labor-saving technology and globalization are rapidly advancing.

Minimum wage jobs usually involve low-skill jobs, which tend to be the ones most easily replaced by automation and relocation to low-wage nations. We've all had the experience of trying to change an airline reservation or calling a customer support number and being connected to someone in India.

A minimum wage increase of this magnitude would without doubt send many more low-skill jobs abroad. Meanwhile low-margin businesses like groceries and discount stores could not absorb double-digit wage increases without cutting staff or raising prices or both. Wages might rise, but so would the cost of groceries and other basic needs.

Any way you slice it, the net effect of a 40 percent jump in minimum wage would be to substantially reduce the number of low-skill jobs in the United States while driving up prices.

Democrats in Frankfort and Washington know this. But they are taking a beating in the polls on their handling of the economy, and this populist proposal is about the only card they can come up with on that front. It will provide fodder for attack ads in the fall, but we think the gambit falls short of what Democrats will need to avoid some painful losses in November.

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