This lady has a PR problem.  No, not public relations.  Personal responsibility.

Brenda Kelly leaves for work at 2:30 p.m., quietly saying goodbye to her sister. The youngest of Kelly’s six children remains occupied in another room. She shuts the door and heads down Baxter Street.

But it’s too late. Her 3-year-old, James Campbell, runs out the door and onto the porch with a scowl on his face, watching his mother go.

“He doesn’t like it when I leave him,” she said.

Her sister, Jenny Johnson, 36, follows behind and takes James inside as Kelly walks toward Chicora Street to her $6-an-hour job. She keeps her eyes to the ground, careful to avoid eye contact with strangers, her mind wandering to her children.

James is her baby, transfixed by Power Rangers. John Campbell, 5, is her cranky child, who when upset can take hours to speak again. Ambur Kelly, 10, is her outgoing one, the exact opposite of her mother growing up. And Christopher Kelly is her shy one, who makes statements far wiser than his 9 years. “I can’t wait to see what he will be when he grows up,” the 38-year-old Kelly said.

There’s also Ernie Crespo, 18, who is headed into the Navy soon, and his sister, Sybil Crespo, who is 15. Kelly lost custody of them after she took them out of Virginia illegally.

Ah, it’s an “increase the minimum wage” advocacy piece.  Let’s find out more.

With the loss of her children weighing on her, she met Chris Kelly. They had two children, married and separated. She then had two children with a third man, but she no longer has a relationship with either of the fathers.

Kelly pays child support for her two oldest children, but she receives none for her other children, despite being a single mother.

Now the picture is a little clearer.  Ms. Kelly simply lacks the capacity to exercise self control.  Apparently every time she meets a man she can’t restrain herself from procreating despite the fact that she already has multiple children (that she already can’t afford on $6/hr.) at home.  Great decision making.

So Kelly walks to work to provide for all six of her children. The path to her $6-an-hour job takes her by fields littered with paper, broken beer bottles and assorted garbage. The chimney smoke rising from Chicora homes smells of burning paper. She pulls her coat closed in the 40-degree weather.

So we’re supposed to feel bad that she lives in a dumpy neighborhood?  She makes $6 an hour, what do you expect?

I like my job,” Kelly said. “I like the people I work with.”

But she would also like to earn more money.

It might be a year before she receives a raise, unless the South Carolina Legislature passes a bill raising the minimum wage from $5.15 to $7 per hour before then. A measure in Congress would increase the minimum wage to $7.25 by 2009 in incremental steps.

Why, pray tell, does Kelly have to wait a year to get a raise?  If you lack the basic job skills to get a raise on your own merits at an entry level job, then you are a sorry worker.  Period.

Most weeks, Kelly works 40 hours, taking home $260 to $300 every two weeks after the court takes out $117 in child support. When Virginia’s Department of Social Services set the payments Kelly worked as a gas station manager earning between $35,000 to $40,000 a year.

“Considering my income and what I was paying, it didn’t seem that much to me,” she said.

She quit that job when Ambur was born in 1996. With only a high school education, Kelly has been unable to find a job that pays similar wages.

Oh, so she had a better job once and she lost it because of her own bad choices.

In December, Kelly used her rent money to buy Christmas presents.

Hmmm… Presents or housing?  Another bad decision by Kelly.

I’ll be honest, stories like these do more to solidify my opposition to increasing (or even having) a minimum wage than they do to mollify it.  It’s not because I hate poor people.  I do not.  I hate being bludgeoned over the head with emotionally charged stories about people who are in a tough spot due to a lifetime of making bad decision on top of bad decision.

Ms. Kelly makes $6/hr. for lots of reasons.  She has little formal education.  She probably has relatively inflexible hours due to her home life.  I would bet that she has had to call in sick or leave early numerous times (at least more than other workers) to tend to the children.  The fact is she makes $6/hr. because that is all that the she merits.  If the government sets the minimum wage to $7.25 maybe she keeps her job and the extra money helps out until inflation erodes her buying power.  She could actually work harder and earn raises (a novel concept!) to offset inflation like the rest of us, but she probably won’t.  Of course, her employer might find out that a technological or process improvement that costs $7/hr. is now cost effective and Kelly will be on the unemployment dole.

I support helping the kids, who are the real victims, not Ms. Kelly.  Every year my wife and I purchase gifts for poor families through Operation Santa Claus so that the parents don’t have to make another bad decision like Ms. Kelly did.  There are other programs, such as Big Brothers/Sisters, that I (and probably my wife) will dedicate our time to once our kids get a little older and less needy themselves.  One that I recently learned about, Girls Inc., seems like an organization worth supporting.

From the Arizona Republic:

Oh, for the days when Arizona’s high school students could roll pizza dough, sweep up sticky floors in theaters or scoop ice cream without worrying about ballot initiatives affecting their earning power.

That’s certainly not the case under the state’s new minimum-wage law that went into effect last month.

Some Valley employers, especially those in the food industry, say payroll budgets have risen so much that they’re cutting hours, instituting hiring freezes and laying off employees.

…

Mark Messner, owner of Pepi’s Pizza in south Phoenix, estimates he has employed more than 2,000 high school students since 1990. But he plans to lay off three teenage workers and decrease hours worked by others. Of his 25-person workforce, roughly 75 percent are in high school.

“I’ve had to go to some of my kids and say, ‘Look, my payroll just increased 13 percent,’ ” he said. ” ‘Sorry, I don’t have any hours for you.’ ”

Messner’s monthly cost to train an employee has jumped from $440 to $580 as the turnover rate remains high.

This is what happens when feel good politics bumps into real world economics.

My employer shifted around the holiday schedule this year and included the Martin Luther King, Jr. holiday for the first time.  At first I was a bit dismayed simply due to the fact that the middle of January is a dreadful time of year for a holiday, but I have tried to spend at least part of the day as it was intended - reflecting on the life of Dr. King.

King was the bridge between simple freedom and actual equality for all Americans.  The magnitude of his accomplishments can best be understood by realizing just how people of my generation take the notion of equality of all people for granted.  It is hard to imagine a time when not only individual bigotry, which will always exist to some extent, was prevalent, but also government sanctioned discrimination.  Dr. King and many others in his movement made it possible for me to never be exposed to the indignity of separate facilities based on a trait as trivial as epidermal pigmentation.

Take a few minutes and watch his infamous speech given on the National Mall in Washington D.C.

One of the few redeeming qualities about Newsweak (not a typo) is the weekly column from Robert Samuelson.  This week he wrote a great piece calling out baby boomers for being overly selfish with regard to government funded entitlements - and their children and grandchildren will suffer as a result.

As someone born in late 1945, I say this to the 76 million or so subsequent baby boomers and particularly to Bill Clinton and George W. Bush, our generation’s leading politicians: shame on us. We are trying to rob our children and grandchildren, putting the country’s future at risk in the process. On one of the great issues of our time, the social and economic costs of our retirement, we have adopted a policy of selfish silence.

As Congress reconvenes, pledges of “fiscal responsibility” abound. Let me boldly predict: on retirement spending, this Congress will do nothing, just as previous Congresses have done nothing. Nancy Pelosi promises to “build a better future for all of America’s children.” If she were serious, she would back cuts in Social Security and Medicare. President Bush calls “entitlement spending” the central budget problem. If he were serious, he, too, would propose cuts in Social Security and Medicare.

They are not serious, because few Americans—particularly prospective baby-boom retirees—want them to be. There is a consensus against candor, because there is no constituency for candor. It’s no secret that the 65-and-over population will double by 2030 (to almost 72 million, or 20 percent of the total population), but hardly anyone wants to face the implications.

Read the rest for yourself.

Many years ago President Lyndon B. Johnson announced a War on Poverty.  His program consisted of an elaborate mix of social programs intended to transfer wealth to impoverished Americans.  Initially the program enjoyed some modest success, dropping the poverty rate from 19% when it was announced in 1964 to a low of 11% by 1973.  Of course the entire decline can’t be solely attributed to Johnson’s program, but it was a major factor.  Since that time the poverty rate has stagnated; bouncing between 11 and 15% since then.

I think that poverty can be dramatically reduced - or at least recycled - in our country through two controversial and politically suicidal moves: the elimination of the federal minimum wage and the decriminalization and regulation of illegal drugs.

Income and wealth disparity continue to exist today.  It comes with the territory in a capitalist economic system where every individual has the freedom to make both sound and poor decisions that affect every facet of their lives.  We can’t - and shouldn’t - attempt to “solve” the issue of wealth disparity.  Poor people, on average, end up in their situation due to one or many bad decisions that have affected their earning and saving power.  Wealth disparity cannot be solved without the imposition of a socialist or communist system.  And then we’re all equally poor!

However, persistent wealth disparity is a problem.  It is indicative of endemic impediments to opportunity and advancement.  It is analogous to a stagnant pond that slowly chokes off the life within.  One might argue that the son of a poor man is statistically more likely to be poor himself due to the bad habits he might learn growing up.  To an extent I would agree, but it cannot fully explain multigenerational poverty.  I hypothesize that opportunities lost as a result of a legislated wage floor coupled with the lure to enrich one’s self by selling illegal drugs is the core cause of pervasive poverty.

First it should be made clear that a person’s “fair” wage is dictated by the market and cannot be prescribed by the government.  Labor is treated as a commodity by an employer, not unlike a machine or a building.  Like any other commodity, every person has a fair market value based on what talents they possess.  If an employer can find a lower cost method of performing your work then he will dispassionately replace you - whether it is another person, machine, or a different process altogether.  Humans have the unique ability to actually improve our talents over time, which increases our market value.  Machines are not capable of this without additional investment of capital.  Human capital, as it is referred to, is not unlike art.  The price paid for a painting is not determined by the painter or the art critic.  The price is determined by the individual willing and able to purchase the painting.

When an arbitrary wage floor, or minimum wage, is imposed by the government businesses face a dilemma and their options are somewhat limited.  They can pass the costs on to consumers, but their ability to do so is outside their control.  A second option would be to let the increased labor costs erode profits.  Contrary to popular belief, businesses do not have infinite profits.  Profits represent return on investment and all businesses, which are ventures of various degrees of risk, must have a certain level of profitability or the owners will simply pull their money out and invest it elsewhere.  The third, and most attractive, option is to keep the labor costs constant by eliminating some jobs.  The fired employees are effectively “priced out of work” by the supposed benevolence of the government.

Historically, low wage jobs have served as the first step up the ladder of achievement.  They allow people with nascent job skills to prove that they are both capable and reliable.  Companies might be willing to hire a worker with no proven job skills at a low, introductory wage to evaluate the employee.  If the employee proves to be qualified then his wage will automatically increase (if his current employer won’t step up to the plate he can take his new found talents elsewhere).

The minimum wage has taken significant opportunity out of poor communities - harming the people it ostensibly benefits.  Privileged children have an easier time financing post high school education, which effectively allows them to bypass low wage entry level jobs.  Poor people have only their ambition, will, inherent talents, and whatever they are able to acquire from the notoriously ineffective government run schools that serve their communities.  In other words, they REQUIRE opportunity to both start and advance.

Where the minimum wage has created an opportunity vacuum the illegal drug market offers a very lucrative opportunity to poor youth.  Much like the situation created by prohibition, it has become clear that government can attempt to crimp supply, but they cannot stem demand.  The result is high prices, which attracts the impoverished, who see no other viable way to succeed.

As young men enter the drug trade in order to take advantage of the “easy” money, many of them find their way into our penal system.  Unfortunately, many of these men (and women) have children.  Other than abusive parents, I don’t think anyone would argue that children are better off without one or both of their parents.  As the parents in these communities are incarcerated, the children suffer and are almost forced down the same path.

Decriminalizing and regulating illegal drugs can turn the jobs of transporting and selling those drugs into safe, legitimate occupations - not unlike the men who drive around beer distribution trucks (at one time they were bootleggers).  Opening the supply valve will drive down prices (prices will fall for other reasons as well), making these jobs less attractive to poor, talented youths, which in turn will encourage them to pursue more socially acceptable and beneficial occupations.

The harmful impact of illegal drug abuse is not restricted to poor citizens, but they certainly feel the effects.  Most critics would be quick to say that decriminalizing drugs would only exacerbate that problem.  That is where the regulation comes into play.  The government could set caps on the active and addiction causing chemicals, not unlike brewed beer has a maximum alcohol content rating.  That would help mitigate addiction rates and the number of people getting “stoned out of their minds.”  More potent drugs would no longer be viable to produce and distribute illegally.  Right now a substantial portion of the price paid for illegal drugs on the street represents the costs to evade law enforcement and (sometimes violently) suppress rival dealers.  If people could buy legally buy inexpensive, low grade drugs at the corner market then the restricted, potent drugs, which will still carry the evasion price penalty, will no longer be cost competitive.

There are numerous additional reasons to abolish the minimum wage and to decriminalize drugs independently, but I’ll leave those up to the imagination (or you can pry them out of me through comments).  Together though, those two acts would do wonders not to eliminate poverty (that is not possible), but to create churn - to give people born into poverty a greater chance to escape its grasp.  That dynamism is good not only for the direct beneficiaries, but also for society as a whole.  The beauty of a free market system is that when hungry people are willing to work hard and take risks they can trade places with those who become fat and complacent.  Government intrusion into this process through laws such as a minimum wage merely entrenches people into the caste they are born into.  And if they try to seek out the most attractive opportunity still in their field of view they are incarcerated.  We can do better in this country.

I was up early this morning (~ 4 AM) feeding the youngest baby and watching Tucker Carlson’s show on MSNBC.  He was talking to a Dem strategist about Pelosi’s first 100 hours scheme and he asked a very well phrased question (paraphrasing):

The new Dems coming into power have claimed to be pro market (in contradiction to the well founded popular perception).  How can they seriously make that claim while simultaneously advocating a federally mandated minimum wage (yet alone increasing it)?

The strategist, whose name I can’t recall, couldn’t muster a good answer.  He actually said something to the effect of, “even $7.25 an hour isn’t enough to make a living.”  He is obviously well skilled in his art though, because he quickly changed the course of his response to a talking points summary of the goals of the 100 hours scheme.  I was hoping Tucker would ask, “why stop at $7.25? What is a living wage?”

There should be no federally mandated minimum wage.  It should be a state issue, but even then I would argue that the individual states shouldn’t meddle in a contract between an employer and a worker.  The minimum wage today is nothing more than a government dependency tool.  It is a vehicle that politicians can use to buy votes from two segments of the population: people who undeservingly get a government mandated raise and people with more compassion than common sense who feel some sort of guilt at their own success and think it is appropriate to toss a bone to the “less fortunate.”

The first few hours of the Dem control presents a mixed bag for me.  They appear to be sincere about restoring fiscal responsibility that has been quite lacking for the last few years.  But their fervent support of government dependency programs is deeply troubling (not that Republicans had been doing much better in this regard).

George Will wrote a decent column calling for the end of the federal minimum wage.  I’m not saying I could do better, but I have seen more compelling arguments against the minimum wage.  His ultimate conclusion is sound, though: let the states decide.

A federal minimum wage is an idea whose time came in 1938, when public confidence in markets was at a nadir and the federal government’s confidence in itself was at an apogee. This, in spite of the fact that with 19 percent unemployment and the economy contracting by 6.2 percent in 1938, the New Deal’s frenetic attempts had failed to end, and perhaps had prolonged, the Depression.

Today, raising the federal minimum wage is a bad idea whose time has come, for two reasons, the first of which is that some Democrats have an evidently incurable disease — New Deal Nostalgia. Witness Nancy Pelosi’s “100 hours” agenda, a genuflection to FDR’s 100 Days. Perhaps this nostalgia resonates with the 5 percent of Americans who remember the 1930s.

…

Most of the working poor earn more than the minimum wage, and most of the 0.6 percent (479,000 in 2005) of America’s wage workers earning the minimum wage are not poor. Only one in five workers earning the federal minimum lives in families with earnings below the poverty line. Sixty percent work part time, and their average household income is well over $40,000. (The average and median household incomes are $63,344 and $46,326, respectively.)

Personally, I’m sick of journalists tossing softball questions towards Dems about why the minimum wage should be increased.  The questions are usually prefaced with a statement such as, “the minimum wage hasn’t been increased since 1997, the longest period ever without an increase,” that all but guarantee the answer they want.  I would like to see journalists ask politicians why we even need a minimum wage.  I think the answers would be very telling.

Guess what…

Wages are going up.  For non-management workers.  On their own.  No government intervention.

The average hourly wage for workers below management level — everyone from school bus drivers to stockbrokers — rose 2.8 percent from October 2005 to October of this year, after being adjusted for inflation, according to the Bureau of Labor Statistics. Only a year ago, it was falling by 1.5 percent.

So…

Why do we need to increase the minimum wage?  That seems to be just about the only thing that nearly all Dems agree is needed.

If you’re really bored visit the Bureau of Labor and Statistics website (the link will take you to their page for wages). They divide national wage data into over 800 labor categories (822 I believe) and of those 822 guess how many have a median hourly wage below the $7.25 per hour minimum the Dems want to impose.  Four - and one of those is waiters and waitresses and I don’t believe that BLS includes tip earnings in their wage number, although I’m not sure.  With tip earnings included they would easily be excluded from this dubious list.  The remaining three (median wage in parenthesis):

• Gaming dealers ($6.85)
• Combined food preparation and serving workers, including fast food ($7.11)
• Dining room and cafeteria attendants and bartender helpers ($7.23)

The overall national average median wage for all occupations is $14.15, while the mean is $18.21.  The mean hourly wage for each and every category is above $7.25.

The simple fact is that a minimum wage increase is not needed.  The labor market justly rewards workers who put forth only a modicum of effort.  Even with the current minimum wage, nearly all workers already earn more than the Dems would give them.

I suggest you take just a couple of minutes to listen to this commentary from Dawn Turner Trice.  She discusses keeping Christmas giving into proper perspective.  My wife will probably accuse me of conspiring with this lady on the subject matter as it is a favorite topic of mine.

I’ll only say one thing, and then relinquish the soapbox.  Families with the means to give a great deal to their children do them a disservice by actually doing so.  The children are woefully unprepared for the fiscal realities of life that face a young person entering the working world.

The B’ham Times wrote an article glorified press release about payday loans in Alabama based on this study by the Center for Responsible Lending.

From the article:

Alabama residents last year paid $225 million in extra fees for their small, short-term payday loans, the fifth highest amount in the country, according to a report released Thursday by a consumer advocacy group that opposes predatory lending practices.

…

Opponents argue such terms prey on those who can least afford them; advocates say they fulfill a legitimate need for people who need emergency cash.

Lending 101: the interest rate is a function of risk.  People who are seeking payday loans are probably the riskiest of all employed debtors.  If they don’t even have cash to pay their bills what are the odds they’ll be able to repay their loan?  The companies who put their capital at risk deserve a proportionate rate of return on their loan; otherwise they won’t lend the money.

Certainly the payday lenders use methods that reasonably savvy individuals wouldn’t tolerate.  Their favorite is to charge fees for various services associated with receiving a loan - in addition to the base interest rate.  When added up, those fees can result in a high annualized interest rate.

While their practices may be morally lacking, there is no law against honestly preying on the poor judgment of others.  If there were such a law then all of those “impulse” products at the check out lines of super markets would have to go.  As long as the companies are not defrauding their customers by not notifying them of fees and interest rates what is the problem?

By the way, the advocacy group that did the study should change its name to the Center for Responsible Borrowing since their goal seems to be to reduce the number of people who make stupid borrowing decisions.