As I mentioned in an earlier post, I attended a townhall meeting entitled "An Economy on the Brink: A Legacy of Debt, Its Impact on Our Children and How We Can Break the Cycle" on Monday evening. The event was hosted by Rep. Jim Moran and featured David M. Walker who is the president of the Peter G. Petersen Foundation among other things. Walker gave a presentation of some of the economic issues that are facing our country and really emphasized the fact that our federal government is borrowing so much money that if we continue on the same rate, the interest on our debt to foreign countries will do our economy some serious harm.
While the information that was being provided was extremely beneficial, I felt as though there wasn't enough discussion about what needs to be done here in Northern Virginia in order to improve the situation. This matched with my experience as an organizer talking to residents of Northern Virginia who feel as though the national talking heads never seem to take into account the high cost of living in NOVA when they are talking about the minimum wage. So I made my way to the microphone, explained that experience, and asked what they believed the federal government could do for those who are struggling to get by in our area.
Rep. Moran said that even though many people are doing well in NOVA, there is still some work that needs to be done in our region. Among other things, he mentioned that we need to invest more in public transit so we can get to and from the places we need to go more efficiently, improve our school systems so we're more competitive, and address the health care system. These were good things to do and will help improve the economy in Northern Virginia. However, I feel as though these solutions were long term solutions that weren't necessarily focused on the circumstances unique to Northern Virginia and wouldn't help working families until years down the line.
Right as Moran was about to move onto the next question, Walker chimed in on my question. Mentioning that the federal government reimburses physicians at different rates depending upon the regional expenses, he said that we might want to look into having a geographically based minimum wage that takes into account how the cost of living varies from region to region. Now granted all of the details of what determining factors would go into establishing the varying wage requirements, I think the general idea is something worth pursuing. I'm therefore turning it out to my readers by asking what you think of the idea. Would it work? Should it be implemented? If implemented, should it be by the federal government taking the initiative or do you think this is really a state (or even county) government issue?
In "better" counties, such as Denmark or Sweden, there is no state-sanctioned minimum wage. Most wages are set by labor regardless of whether one is represented by a Union or not (90%, including most managers, are represented by a Union).
Why is this a better model? Because all workers need to realize that their toils have intrinsic value, and regardless of how special we all think our skills are, if another person can arguably do a decent job for a lower rate of pay, all of our wages will suffer. This is one reason why Unions fight for the rights of workers they (we) don't represent. Wage suppression and the race to the bottom must be stopped.
With the stroke of a pen, Gov. Kaine, could easily give collective bargaining rights to state public employees. I don't represent a single public employee in the state, but it's still in my best interests to see that our public employees get rights that I consider to be fundamental.
Aside for being grossly inhumane and horrific on numerous levels, the institution of slavery was detrimental to free-workers and free-farmers everywhere. The same can be said for the use of child labor. Obviously a hike in the minimum wage is a good thing, but a better solution is to allow pools of low-wage earners partake in our capitalist system by sticking together and collectively negotiating on the open market to obtain the true value for their work. Keeping them divided (either by law as in the case of state employees, or in fact, as in the case of private sector employees faced with strong Union-busters), keeps wages unnaturally suppressed.
I'm going to make an assumption that the minimum wage is going to affect other wages in that area; in other words, if an area has a low minimum wage then all jobs in that region will have a lower wage (compared to similar jobs in wealthier regions).
If that's the case, there are all kinds of potential side effects. Off the top of my head:
Job mobility: Who wants to leave a higher-paying job for a lower-paying one, even with a change in the COL? It could well lock people into living in a particular region.
Job recruitment: If you're trying to hire in a low-cost area, how do you recruit employees from high-cost areas? Moreover, what if you're a business (or government) that has employees in multiple regions? Two employees doing the same job making very different salaries? I think this would essentially segregate rural from urban areas.
Suburban sprawl: Suppose the salary structure is based on where you work. What's to keep someone who works in NoVa moving out to Westmoreland, King George, or Caroline Co. so they get the low cost of living with the high salary? What effect would this have on transportation, gas use, etc.?
Tax rates: How does this affect the taxes people pay, especially for things like social security?
COL isn't static: I'm not an economist, but I wonder if disparate salaries would increase the disparity in COL. With relatively uniform salaries, COL may be limited in how much it can vary from place to place.
I think there could be a lot of unintended consequences. Although I am, of course, open to counter-arguments!