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November 26, 2014

Democrats Hope Recycling Economic Wedge Issues Lead to 2016 Victories

After suffering a historic beating at the polls in 2014, many leading Democrats now say a big reason for their losses is that they failed to drive home with voters a message of economic populism; namely, income inequality, wage stagnation, and the need to raise the minimum wage. They say they are determined to fix that failure in their quest to win back seats from Republicans in 2016.

Democrats, fleeing from Obama’s myriad failures and seeking wedge issues with which to win close races, actually did implement quite a bit of economic populism in the months leading up to the mid-terms; it just didn’t resonate with voters. As for why it did not resonate, it might be that after six years of Obamanomics – from the “stimulus” package that actually increased unemployment by more than 2%, Son of Stimulus, Cash for Clunkers, Summer of Recovery, Summer of Recovery 2, Summers of Recovery 3 and 4, and so on and so forth - voters simply no long gave Obama and the Democrats credibility on economic matters.

And with good reason. The issue of raising the minimum wage polls well, but in actuality has little bearing on the lives of most voters. The reality is that, according to a report issued by the U.S. Department of Labor earlier this year, only 2.8% of the U.S. labor force earns at or below minimum wage. Of that 2.8%, many workers, such as restaurant servers, make much higher than that due to tips, which reduces the number of Americans actually earning minimum wage to just 1.1%. Of those earning minimum wage, roughly half are workers between the age of 16 and 24 years, and most of these are students working part-time.

Ironically, minimum wage laws hurt most those that Democrats claim to be the biggest protectors of; minorities and youth. Nobel Prize winning economist Milton Friedman once stated that “the most anti-black law on the books of this land is the minimum wage law.” That is because minimum wage laws were originally passed as a way to keep non-union Southern blacks from competing with unionized Northern whites for jobs. Minimum wage laws price low educated, unskilled workers out of the labor market, and this disproportionately impacts blacks (in large part due to the fact that Democrats continue to fight school choice, leaving poor blacks trapped in failing schools, unable to acquire the skills needed to compete in a global job market).

In short, the number of workers earning minimum wage, who are also heads of household trying to support a family (those needing a “living wage”) is miniscule, which is why it has such little impact on the electorate as a wedge issue.

So, what about wage stagnation? This is an issue that clearly has more of an impact on the average voter, yet is it a winning issue for Democrats? How will they explain that wage stagnation has gotten worse under Obama and a Democrat-controlled government? Can they truly blame it on Republicans, who have been out of power during the entirety of Obama’s presidency?

Wage stagnation is due to a number of factors, not the least of which is the Obama/Democrat Party war on business. Businesses react to political dynamics as they plan for the future, so it is not surprising that they are timid in their plans for investment and expansion when the president and his party openly and constantly demonize business owners and corporations as evil, greedy, corrupt, and with no concern for the needs of the workers. Add to that the rising taxes on businesses which put them at an economic disadvantage with foreign corporations, as well as the enormous growth in the number and scope of regulations which carry added costs to comply with, plus the massive cost of the ObamaCare mandates, and you have a recipe for economic stagnation.

When businesses don’t know what to expect from government policies, and when they are treated as the enemy, they have a tendency to bunker in, conserve cash, reduce the workforce in an effort to do more with less, and try to wait out the unfavorable political and economic climate.

Liberals operate on a theory of economics in a vacuum, pretending that tax and regulatory policy does not change human behavior. Yet we have ample proof otherwise. Businesses are amassing record profits as they conserve cash and refuse to expand their workforce. They reacted to the ObamaCare mandates by cutting work weeks to 29 hours and keeping employment under fifty workers to escape those mandates. The one industry that has really benefitted is the temp agency businesses which provide workers for businesses while simultaneously letting them stay under the magic number of 50 employees. They shift to more part-time work (a staggering 77% of all new jobs in 2013 were part-time jobs). Businesses will do what they are forced to do to survive.

Finally, as to the subject of income inequality; that was another losing issue for Democrats. Under Obama, the rich have gotten richer and the poor poorer. Democrats also hammered in the so-called gender pay gap, but here they were forced to admit their own deception. For months Democrats claimed women earn less than men. Betsey Stevenson, a member of the White House Council of Economic Advisers, touting Obama’s executive orders to combat the menace on “Equal Pay Day”, declared “They’re stuck at 77 cents on the dollar, and that gender wage gap is seen very persistently across the income distribution, within occupations, across occupations, and we see it when men and women are working side by side doing identical work.”

Yet Stevenson turned into a bumbling mess when confronted by McClatchy reporter Lindsay Wise, admitting her deception by saying “If I said 77 cents was equal pay for equal work, then I completely misspoke, So let me just apologize and say that I certainly wouldn’t have meant to say that…77-cents captures the annual earnings of full-time, full-year women divided by the annual earnings of full-time, full-year men…There are a lot of things that go into that 77-cents figure, there are a lot of things that contribute and no one’s trying to say that it’s all about discrimination, but I don’t think there’s a better figure.” The reality is that the wage gap between men and women is almost completely accounted for by the pay scales of the professions they choose to enter, time in the work force, etc.

To make matters worse, it was then revealed that the Obama White House pays women less – 82-cents on the dollar – to do the same work as men! The same wage discrepancy also was common among women employed by Senate Democrats. Pot, meet kettle!

Just before the election, Hillary Clinton, campaigning for Massachusetts Democrat gubernatorial candidate Martha Coakley, screeched “Don’t let anybody, don’t let anybody  tell you that, ah, you know, it’s corporations and businesses that create jobs.” The comment immediately went viral, with Republicans replaying the clip non-stop. Poor Hillary tried to “clarify” her statements, but the damage was done, and no one believed the clarification anyway. It was clear what she meant. Of the 25 candidates that Hillary Clinton actively campaigned for, more than half lost their races, and several more eked out extremely narrow wins in states that should have been easy Democrat victories.

The bottom line is that the voters seem to have grown largely immune to the economic populism of the Democrats, and they seem to realize that it is economic suicide to continue to demonize the very businesses that provide the jobs that Americans desperately need. If Democrats plan to use economic issues to win in 2016, they had better come up with some new material. The old stuff ain’t working anymore.

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