"Living Wages Lead To Dying Economies" 
By Tom Donohue - President and CEO, U.S. Chamber of Commerce

Small businesses are right to be wary of the living wage proposals being introduced and pushed by labor unions and "community activists."

 

More than 60 jurisdictions have enacted living wage ordinances since the first one in Baltimore, Maryland in 1994. Living wage laws require city contractors, many of them small businesses, to pay their employees a significantly higher wage than the federal minimum wage if they want to do business with the city. Some cities, such as New Orleans, Louisiana, have gone even further and applied a living wage law on all private employers in their jurisdiction. Proponents of the living wage maintain that the federal minimum wage is inadequate for a worker to support his or her family without food stamps or other public aid.

 

But what the living wage supporters don’t point out to politicians and the media is that most of the jobs affected by living wages laws are found in small businesses. According to the Small Business Administration, small companies provide the largest proportion of entry-level jobs in the workforce.

 

Living wage increases hit hardest at new entrants to the labor force by preventing them from getting their feet on the bottom rung of economic opportunities and working their way up to a higher paying job. When labor costs rise, the new entry level jobs that would have been created never materialize and employer-provided benefits such as health care and on-the-job training are scaled back to absorb the increase in labor costs.

 

Studies such as the one conducted by the Federal Reserve Bank on the San Francisco living wage law calculated the effect on unemployment when companies are forced to raise their wage rates. The picture is what common sense dictates: the loss of jobs for low-wage workers largely offset the benefit of higher wages.

 

Living wage laws lower employment and hurt small businesses. Despite what living wage supporters say to politicians, their proposals lessen job opportunities for those at the bottom of the economic ladder while increasing costs for everyone.

 

The business community is urging the Senate to defeat killer amendments to the omnibus trade bill that includes TPA renewal that may come up for a vote the week of May 20. At the top of the list is an amendment by Sens. Larry Craig (R-ID) and Mark Dayton (D-MN) that would allow lawmakers to challenge any provision of a trade deal that seeks to change anti-dumping or other laws designed to protect US companies from "unfair" trade practices such as subsidized exports. The Bush Administration has hinted it may veto the package if that amendment passes.

 

The omnibus legislation would expand President Bush's negotiating authority overseas, extend preferential treatment for trade with Andean countries, and provide health coverage for workers displaced by international trade deals.

 

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A coalition of environmental, consumer, and labor organizations have filed a last-minute legal challenge against the new regulations allowing Mexican trucks to operate on American highways. The suit, filed in a San Francisco federal court last week, centers on emission standards for Mexican trucks, which it claims are not as stringent as those in the United States.

 

A spokesman for the Federal Motor Carrier Safety Administration said despite the suit, the border would open to Mexican trucks this summer as scheduled.

 

The U.S. business community favors allowing Mexican trucks to use American highways.

 

A House GOP Medicare prescription drug benefit plan unveiled last week would guarantee drug coverage for all Medicare recipients. House Speaker Dennis Hastert (R-IL) said the $350 billion plan would be delivered through private insurers. Low-income beneficiaries would get free coverage, while higher income users would pay a premium of around $40 a month. The proposed legislation also makes changes in reimbursement for Medicare providers. The bill could be considered before the end of this month.

 

Small business health care advocates are strongly urging Congress to reform the Medicare program to ensure its solvency before adding an expensive new prescription drug benefit.

 

American companies selling digital products - such as software and music - over the Internet to European customers will have to add a value-added tax (VAT) to their transactions, according to new rules approved by the European Union. Under present U.S. rules encouraging e-commerce, businesses are not taxed for digitally delivered products sent to a consumer's home computer. After July 2003, U.S. and other non-EU companies will have to be registered with a tax authority in an EU-member state and levy that country's VAT rate on all applicable Internet transactions.

 

The U.S. Treasury believes the rules are discriminatory and place additional administrative burdens on American companies.

 

Technology
House Committee Restores Highway Improvement Funds

The House Transportation and Infrastructure Committee voted yesterday to restore $4.4 billion in highway aid to the federal budget. "This funding is necessary to combat our nation's congestion problems, improve highway safety, and protect jobs," said committee chairman Rep. Don Young (R- AK). The "Highway Funding Restoration Act" increases the level of federal highway funding for fiscal year 2003 to at least $27.7 billion, the level called for in the 1998 law authorizing transportation spending. The legislation now makes its way to the full House for a vote.

 

For more information, go to:
http://www.a-t-m.org/

 

Workplace Issues
Immigrant Hiring Procedures To Be Simplified

The U.S. Department of Labor is launching an effort to reform the regulations governing the employment of foreign workers on a permanent and temporary (H-1B visa) basis. The proposal, published last week in the Federal Register, would require employers to conduct recruitment before filing their labor certification applications on automated forms filed with the federal government. The new rules would reduce the role of state workforce agencies in the process, streamlining the process used by employers to permanently hire immigrants.

 

Copyright (c) U.S. Chamber of Commerce 2001-2003

 

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Reprinted by permission, U.S. Chamber of Commerce, 2003. Copyright U.S. Chamber of Commerce, 2003.

 

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