• Raise the minimum wage from $7.40 an hour to $10 an hour and remove exceptions in the law that allow employers to pay less than minimum wage to some workers.
• Cut utility rates by 20 percent.
• Require all employers to provide health coverage or pay a fine.
• Increase unemployment benefits by $100 a week, extend benefits by six months and make all workers eligible for unemployment. The maximum unemployment benefit is now $387 a week.
• Impose a one-year moratorium on home foreclosures.

It’s frankly a bit stunning and just goes to show the complete and total ignorance of basic economics apparently held by the state’s Democratic Party leadership. The Republicans in the state have actually taken a bit of initiative to propose budget cuts to close the widening state budget deficit, but Republicans long ago gave up the ghost on having any credibility when it comes to walking the walk.

Anyways, perhaps the Democrats have not gotten the memo that the overwhelming evidence shows that a higher minimum wage increases unemployment (or decreases employment). Perhaps 15.2% isn’t high enough for them. Why does the minimum wage increase unemployment? Because it prices those out of the market with the least skills. Look at it from an employer’s perspective. If you were to hire someone at $10 an hour, would you hire a teenager or someone with little to no skills, or would you hire someone with some skills or prior experience? Of course you would hire the person with prior experience. The higher the minimum wage goes, the less likely that employers will hire people with lower skill sets. This is why, due to our complete and utter failure of public school systems in urban areas in this state, unemployment among teens, African-Americans, and unskilled laborers is close to all-time highs. A higher minimum wage will simply exacerbate this problem. It ends up harming people, not helping them.

Requiring all employers to provide health insurance or pay a fine is another killer of jobs, primarily jobs provided by small businesses. I know someone who recently started a small business and it has done extremely well. He has hired about ten people, all part time. These are ten people who are happy to have any job at all. If he had to pay for health care for these employees, he would probably have to lay about half of them off, depending on the cost. It would degrade the service he provides by being required to provide the same service with fewer people, and it would surely drive up prices.

Oh, and instituting a one year moratorium on home foreclosures would further encourage the moral hazard of walking away from one’s home. Heck, I would even consider walking away if I got a year of free rent. House prices in the Grand Rapids area have already dropped 25-30% in the last couple of years. Anyone who has purchased in the last five or so years is probably underwater. It makes simple business sense to stop paying the mortgage, save the payment for a year in a savings account, and walk away with thousands of dollars in savings.

Way to go Democrats! There’s nothing like pouring gasoline on a fire to try and put it out!

The interesting thing is that Mayor Heartwell says that the second round of interviews for the three finalists will include more hard-hitting topics, such as:

He believes they will be asked about their stand on whether to ask voters for an increase in city property or income taxes.

He also expects they will be quizzed on whether they support a living wage ordinance that could raise minimum wages in the city.

Oh boy. In other words, the litmus test will likely be something along the lines of, “do you think city government should be bigger and more invasive?” The response of “yes” will work in the candidate’s favor.

If both those issues pass in the city, get ready for making a bad economic situation even worse.

An organization called the Association of Community Organizations for Reform Now (ACORN) is one of the prime backers of the proposal. ACORN is essentially a bunch of ill-informed socialists who campaign for living-wage and increased minimum wage laws, in addition to a whole host of other collectivist campaigns such as universal health care, “affordable housing,” social[ist] security “protection,” etc.

However, the funny part is that when ACORN was confronted with having to pay a “living-wage” in California, they sued the state, seeking an exemption. In ACORN’s legal brief, they claim:

“The more that ACORN must pay each individual outreach worker—either because of minimum wage or overtime requirements—the fewer outreach workers it will be able to hire.”

Well, that summs it up perfectly, doesn’t it? Need we say more?

Oh, by the way, unemployment rates increased in 14 of Michigan’s 17 major labor market areas in May. The Grand Rapids area’s unemployment rate went from 5.7% in April to 6.3% in May.

We’re dumbfounded. We can’t understand what they are thinking. The Democrats in Michigan (with the help of the Republicans) are responsible for the over-protection of unions in this state. Those unions have created a business atmosphere where wages are so high that manufacturers are fleeing the state in droves. Artificially high wages have created unemployment.

Michigan’s unemployment rate stands at 7.3%. That ties us with Alaska for the highest unemployment rate in the nation. The failed economic policies of union favoritism are coming home to roost.

But now, what do they propose? More of the same! Raising the minimum wage increases employers’ costs. When employers are forced to pay more for labor, they will hire fewer people. This will further increase unemployment and decrease economic productivity.

See: Unemployment: Causes and Cures.

As an example: suppose you’re a small business owner. You have four employees making $5.15 an hour. That’s about $164 a day in labor cost (plus the expense of payroll taxes). If the minimum wage goes up to $7.15 an hour, that’s $228 in labor cost a day. What is a small business owner to do? That’s a 40% increase in labor costs. His choice is to either raise prices (probably close to that 40%, which most business owners know is suicide) or to fire one or two people. If he fires one person, his costs go down by about $57 a day, reducing the total to $171. That’s a lot easier to recover in price increases. Plus, a little more productivity from those three remaining employees will probably cover the loss of one.

What just happened? The increased minimum wage accomplished two things:

1) it increased unemployment
2) it increased prices

Particularly hard-hit are black and latino minorities, which already have higher unemployment rates. So what the Democrats propose to do disproportionately harms the very people they claim to want to help most.

We are forced to conclude that Democrats’ behavior is motivated by one of the following:

1) Complete ignorance of economics, or
2) A desire to further harm the economy of Michigan, or
3) A desire to look like the party of the poor people.

We believe it’s probably a combination of 1 and 3. However, their economic ignorance (or ideological bankruptcy) causes the opposite of the desired effect. Is Michigan consigned to a perpetual state of economic funk?

See also: Michigan Wage Hike Threatens Already Fragile Economy.

It is a pretty well-established fact in the world of economics that unionization, especially forced unionization, increases unemployment. Why? A brief explanation: unions limit the size of the workforce because they require higher wages to do jobs that could be done at lower wage levels. The result is that the supply curve of labor is skewed by higher-than-market wage levels. Employers, in order to remain profitable, are able to hire fewer people with the same amount of money. Therefore, some workers get more money per hour, but fewer workers are employed, increasing unemployment.

There has been an extensive amount of research on “right to work” states where forced unionization is outlawed (you can’t be required to join a union in order to work in a union show in a right to work state). Right to work states have seen faster rates of growth in employment, wages, and decreases in poverty rates that non-right to work states do not show.

In addition, organizations like the AFL-CIO advocate in favor of so-called living wage laws, requiring companies and government units to pay higher wages. Again, economists understand that the minimum wage increases unemployment (due the same principle as unionization), but the living wage magnifies the problem. Increasing wage levels artificially through regulation distorts the labor market and, once again, forces employers to hire fewer people, once again increasing unemployment.

And the real sticker is that those hardest hit are minorities, unskilled laborers, and the disabled, since they are the first to go when these types of laws go into effect. Why hire someone who doesn’t have the skills at a high wage when you can find someone who does and pay the same?

So, go ahead AFL-CIO and drive the big bus around getting people whipped up into a frenzy over job creation, but know that you’re a big part of the problem.