Is Minimum Wage A True Cure? – With Vance Ginn : Is government’s “cure” for businesses destroyed by the shutdowns worse than the ailment? Do free markets settle salary questions by themselves? Does the Bible speak to the concept of minimum wage? What does history teach us about this issue? What demographic suffers the most when minimum wage is instituted? Tune in to hear Dr. Vance Ginn give insight on the harmful effects of minimum wage.
Air Date: 01/19/2021
Guest: Vance Ginn
On-air Personalities: David Barton, Rick Green, and Tim Barton
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Transcription note: Â As a courtesy for our listeners’ enjoyment, we are providing a transcription of this podcast. Transcription will be released shortly. However, as this is transcribed from a live talk show, words and sentence structure were not altered to fit grammatical, written norms in order to preserve the integrity of the actual dialogue between the speakers. Additionally, names may be misspelled or we might use an asterisk to indicate a missing word because of the difficulty in understanding the speaker at times. We apologize in advance.
Faith and the Culture
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My name is Rick Green. I’m a former Texas legislator, and America’s Constitution coach. And I’m here with David Barton. He’s America’s premier historian and our founder at WallBuilders. And also, Tim Barton is with us national speaker and pastor and president of WallBuilders. Y
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Alright, David, Tim, well, at least we’re finally to the point where most politicians are recognizing that the COVID crackdowns have just been detrimental to a destruction point for our businesses, and now they’re looking for ways to help. And once again, the cure or the medicine is potentially worse than the disease.
They’re throwing out, increasing the minimum wage, which will have Vance Ginn on later to talk about the kind of, I guess, historical and economic perspective on it. But we want a biblical, historical, and constitutional perspective. So let’s start with a biblical perspective on minimum wage, actually forcing employers telling them what they have to pay to their employees. Does that make sense biblically?
Well, one of the best parables, I think, for that, guys, is from Matthew 20. It’s actually one of the parables that some people argue is the reason Jesus they say is in favor of socialism, which of course, he’s not. But this is the parable of the laborers hired to work in the vineyard. And if you remember the parable, there was a man who owned a vineyard, and he went out early one morning to find people to come work in the vineyard, and he hired them. And he agreed to pay them a certain price, and they went and worked in the vineyard.
And later on during the day, the owner said, I’m going to go hire some more people, and he hired more people and later in the day, he hired more people. And so essentially, it would be like hiring somebody at 7am, and then 9am, and then then maybe 11, or 12, and then 1pm, and 3pm, and even 4pm or 5pm.
What Did Jesus Say About Minimum Wage?
At the end of the day, in the parable, the owner comes and calls everybody to him who had wavered all day, and he started giving them all the equivalent of, just for our understanding to the simplicity of it, he gave them all $100.
And in the people who’d only worked for an hour or two made $100, and then the people who started the very early morning 7am, right, and again, this is just the example to help us understand it. 7am, they started that morning, and they come to the owner of the vineyard and they thought, well, if all of these people made 100, we’re probably going to make way more. And the owner looks at him says, okay, guys, we agreed to $100, here’s 100 for you.
And those guys would work all day start to get angry, and they say, wait a second, we’re the ones who work the longest and the hardest, we should get more. And the owner said, but didn’t we agree to this amount when you started? Didn’t you say you would work all day for $100? And of course, that is exactly what they’d agreed to.
And then the end of the parable, he says, are you just angry at me because I’m generous with my money? Is it not lawful for me to do what I want with my own money? And as Jesus was telling this parable, one of the things we know about parables is that Jesus would often start parable from the Gospel saying the kingdom of heaven is just like this, a man went to.
And then, he would tell the parable, he would tell the story. But what he was doing was showing a spiritual kingdom principle, right? Because the kingdom of heaven is just like this, but then he would tell an earthly story, to help maybe get some people to wrap their minds around it or give them an illustration or example to see what the kingdom of heaven was like. And the reason this matters, is he showing them a practical earthly example and saying the kingdom of heaven is like that.
The practical earthly example he showed in this parable was that the owner actually went negotiated contracts with everybody he hired. And in the midst of negotiating contracts, well, you can know, everybody that works somewhere, generally speaking, not everybody who works somewhere makes the exact same price.
Because you have some people who work longer than others, you have people that work in different positions, and some positions require more skill than others. And then there’s management positions, and all of these positions, people are, generally speaking, making different amounts of money.
But all of those were part of the contract that when somebody offered you the job, when you went seeking a job, you agreed to the amount you were going to work for. Now, the reason that’s the big deal, is because when you look at things like minimum wage, it actually contradicts this notion that Jesus was explaining of how life operates. If there is a minimum wage, the owner no longer has the ability to negotiate that the price per hour or the salary, and some people would say, yeah, but it can keep them from cheating somebody else? No.
No. If somebody’s offering you money, and you don’t think it’s enough money, you don’t have to take the job. And the argument might be, but nobody will give me as much money as I deserve. Well, the free market answer is, if nobody will give you that much money for what you think your labor is worth, your labor might not be worth that much money, because that’s how the free market works. You are paid based on the value you are to a company, to a business, and organization.
Government Overstepping Its Boundaries
And even at the end of the parable, when these laborers who were hired early on in the morning, get angry, and the owner of the vineyard says, isn’t it lawful for me to do what I want with my own money? This is where when you see government intrusion come in, and the government says we are going to require every business owner to pay at least $14 an hour or $15 an hour or $16 beyond the unintended downstream consequences of whether we talk about inflation or the decrease of the purchasing power of the dollar, we can go through this list.
But the point is, in this parable, the owner had the ability to do what he wanted with his money. And anytime the government steps in and tells us that you’re no longer able to negotiate a contract that you are no longer able to do what you want with your money, the government has overstepped the boundaries of what the Bible would indicate is the way that a business should be able to operate.
Alright, that’s a great biblical view on this. Now, let’s get some kind of constitutional economic view on this and even some historical view with what other people have done and how it’s damaged other nations when they continue to increase that minimum wage.
Vance Ginn will be with us. He’s Chief Economic Adviser over at Texas Public Policy Foundation and also just got back a few months ago from working in DC at the White House dealing with the same issue. Stay with us, you’re listening to WallBuilders Live.
A Moment From American History
This is Tim Barton from WallBuilders with another moment from American history. Founding Fathers John Adams and Thomas Jefferson originally worked closely together but later became ardent opponents. This trouble Dr. Benjamin Rush, a signer of the Declaration, who knew both of them very well. In the Bible, 2 Corinthians 5:18 tells us that God has given each of us the ministry of reconciliation. Dr. Rush believed this and set out to bring the two back together.
It took a while, but Adams and Jefferson once again became close friends. And looking back on his role in helping bring about this reconciliation, Dr. Rush stated, “It will give me pleasure as long as I live to reflect that I have been in any degree instrumental in affecting this reunion of two souls destined to be dear to each other and motivated with the same dispositions to serve their country though in different ways.
For more information about Dr. Benjamin Rush and his other remarkable achievements, go to wallbuilders.com.
Welcome back to WallBuilders Live. Thanks for staying with us. Dr. Vance Ginn back with us. It’s been too long, but thrilled to have you with us, man, back home for Texas Public Policy Foundation. I’m glad you didn’t stay in the swamp too long. I know you worked at the White House for a while. But you’re one of the least guys I would want to become swampy. So I’m glad you came home soon. Anyway, thanks for coming on, man.
Hey, it’s great to be with you, Rick. I know it has been way too long, and I was glad to be out of the swamp back in the great state of Texas.
Welcome Vance Ginn
Well, good to hear, good to hear. Well, listen, we were looking at this article and thought you’d be the perfect one to comment on it. Looks like they’re doing minimum wage hikes all over the country. You know, that makes a lot of sense since you know businesses are struggling so much and can barely keep the doors open, let’s just raise their costs for them via law. Can you help us understand why people would want to do this?
Well, it definitely leaves you scratching your head, especially at a time when millions of people are still unemployed and businesses are having to shut down from government restrictions in response to COVID-19 and other things going on. So it seems like a great idea just to raise their costs arbitrarily, right? No, definitely not.
And what we see time and again, is that when you raise the minimum wage, what it does, I mean, the research is clear on this, Rick, is that it hurts those most that you’re intending to help, which are those that are getting paid a lower wage. Most of the time really young adults and minorities, I mean, those are the ones that are really hit hardest by raising the minimum wage. And so we’re going to see that all across many places across the United States.
You know, this is one of those that sometimes it’s hard for people to grasp this. It should just make sense. But you always helped us a Patriot Academy to make sense of it and we do that activity with the students. And I mean, light bulbs come on with the way that you teach this.
An Economic Experiment
I guess, what’s a good, simple explanation to somebody that thinks well, you know, that person just needs to take home more money, and that’s the only job that they have, so that employer needs to pay them more? I mean, how do we simplify this so that people can understand why that just doesn’t work?
No, it doesn’t, I think, one way, and thank you for bringing up that experiment, it’s something that I really enjoyed doing this minimum wage game with high school students, and even with college students when I was back in academia. And I think you can even break it down more to your budget. If there was something where your budget just stayed the same, and you were maxing out your budget each month, right, and then something arbitrarily just goes up from really no fault of your own, just where the government increases the cost of that, it’s going to put you above your budget.
And if your income isn’t increasing, which is what we see with a lot of families, at least month over month, but yet your budget goes up, how can you afford it? Well, you got to find a cost cutting measures, maybe with some of the other areas of the budget, if you want to keep spending on that particular item. Or what do you do? You stop spending on that item.
And that’s what we see also with businesses. Is that when their cost, which labor costs for many businesses is their number one cost, and it arbitrarily goes up, and their revenue doesn’t change, they’ve got to make some tough choices. Do I raise prices and potentially lose out on consumers buy my product?
Tough Choices for Employers
Or do I cut workers and it put them out of a job or other things? And so it’s a lot of tough choices that are being imposed by this new government increase, which is really just a regulation of cost increase on these businesses. And so I think, maybe looking at your family budget might be a good way to think about it.
Yeah, it makes sense. Because I mean, at that point, you don’t have a choice. You have no more money, you have to cut somewhere and these businesses, that’s the place they end up having to cut. And like you said, it hurts the very people they’re trying to help. Yet the states and local governments are still moving that direction. Looks like I mean, according to this article, 80 more government bunch of local entities, and then some states as well are going to add additional minimum wage increases in 2021.
I’m guessing, as an economist, you would say that’s probably not going to help pull us out of this incredible, I don’t even call it the COVID mess, it’s the COVID crackdown mess, because it’s the government did, not what the virus did, I’m guessing, increasing minimum wage does not help us get out of this?
It does not, and in fact, it’s going to make the situation worse. Because we’re already seeing what some are calling a K-shape recovery, where you have the middle income. The upper income people are still doing fine, because they can work from home, they can do other things of that nature.
Which Demographic is Hit the Hardest?
Whereas your lower mid skilled to lower skilled workers, they’re oftentimes cannot work from home and work remotely during the situation. So they shut down, have heard more of the lower income people more. So that K-shape recovery means that the higher income people, their incomes just continue to go up or stay the same, whereas the people at the bottom, they’re losing their jobs.
And so what you’re seeing right now with raise in the minimum wage is many of those lower income folks are going to be the first people to be let go, especially at a time when shutdowns are in place and things of that nature. And even during good times, Rick, if you’re raising the minimum wage, you have this choice between do I hire more workers right normally or do I use capital? And so when you’re raising arbitrarily the price of labor, which is the minimum wage, government enforced measure, it makes capital cheaper.
And so a lot of businesses will say, you know what, I want to move more towards kiosks like McDonald’s has done, right? When you go to McDonald’s now inside, you’re using a kiosk oftentimes to order your food. Well, when you do that, who is creating the kiosk? That’s going to be your upper income people, your high skilled folks. Who is maintaining the kiosk? Well, it’s middle income, middle skilled workers overall.
And so what minimum wage also does is it increases income and equality, which many of these folks who want to raise the minimum wage that are very progressive, you know, they harp on income equality a lot, but their very policies are the ones that are widening income inequality overtime.
Yeah. It’s like they can’t see past the first step, right? I mean, you have to be able to look at what the unintended consequences are downstream, from what allows them to have a press conference and feel good and think that they’re helping people, but the next logical thing ends up hurting them.
You know, and you’re focused in on that minimum wage earner. They’re the ones that is hurt, and I think you’ve made that point. Now, let’s talk about the business itself when you mandate from government how much you’re going to spend. I can’t help but immediately think of, and I think it was Maduro in Venezuela that forced.
I mean, it was like a 3,000% increase, was an insane increase with the minimum wage there a few years ago. And I mean, obviously, we’ve seen their whole system fall apart. But that was one of the things that they thought this will solve it, you know, government will dictate. While they’re going out of business, we’re going to well, raise their expenses. Zero logic in that, and yet these governmental entities in America are following suit.
Well, you know, we have what’s called a mixed economy, where the backbone of it is really capitalism, at least from our Founding Fathers and things of that nature. But we have a lot of socialism type tendencies throughout our economy overall. And this is definitely one of them where you haven’t in government imposed, this extractive sort of institution like the minimum wage, instead of letting the market place work.
You are hurting, like you’re getting at these businesses who are trying to and just to make profit, and keep their family and their livelihood going and hire more workers and invest and grow our economy and all the great things that we know to be good in capitalism. But instead, the government keeps getting in the way, and this is another way that they’re doing that, especially right now, at a time.
A Constitutional Federal Minimum Wage?
I mean, I would argue that look, there should not be a federal minimum wage at all. I would move to, if you’re going to have a minimum wage, it should be more at the state level, because that allows for federalism, this laboratory of capitalism and democracy really to shine. And so that would allow Texas to have its own, and California. Or you know what, just let the marketplace work, it does a great job.
Because if you put a minimum wage in place, what that means is any wage that somebody would be willing to accept below that is now forced out of the system. And that’s making them worse off over time. And those businesses then will lose profitability and reduce our potential economic growth and therefore prosperity over time.
Yeah, and I mean, just from a freedom perspective, it ought to be up to you and your employer, you know, two people coming together meeting of minds as to what that price should be for what you’re willing to give of your time. Last thing I’ll ask you, you had talked about, I think it was a year and a half or so ago, there was a study that CBO did that said something like, I mean, just a $15 minimum wage nationally would cost us literally millions of jobs.
Yes. Yeah, they projected it would be about 3 million jobs lost across the United States. And what’s interesting about that is the number of people that are currently making the minimum wage is very small share of the overall labor force. People talk about this as being something that we need to change, because so many people are on minimum wage, and they can’t afford things. And there are some sad stories that are out there, for sure. But raising the minimum wage is going to hurt those people more.
How to Follow Vance
And if it’s costing us 3 million jobs at a time when millions of people are out of a job right now, I mean, the unemployment rate is 6.7%, across the US currently, but that’s also where they lower labor force, given the shutdowns that are going on, people have just stopped looking for a job, right. And so it’s much worse than that 6.7.
It’s closer to 12%, if you look at the, use 6 unemployment rate, which includes underemployed, and those who’re just discouraged workers, is what they’re called. And so raise the middle wage would be a horrible thing overall. And we can’t lose 3 million more jobs in the future prosperity and the livelihoods of what’s going on here.
I want to encourage people to follow you on, I assume you haven’t been kicked off Twitter yet? You’re one of the good guys, so you might be. But if you’re still there, Vance Ginn is the Twitter handle and I’ve enjoyed following you throughout the whole COVID crackdown thing. You’ve brought science forward, the data. It’s just been a good source to help me know that I’m making my decisions based on science and good information as well. So I encourage people to follow you there.
But I also noticed, I think it was a couple days ago, you added like five other places that you could be followed. So Parler, which is, you know, we’ll see when it comes back. And your website, I guess is the main place to give out Vanceginn.com, and there’s two nn’s there, right?
That’s right. That’s right. And the other one, Rick, would just be a Texaspolicy.com where I work at TPF, and the Texas Policy Foundation has a lot of good resources. When you look at personal responsibility, individual liberty, and free enterprise, that’s really what we’re trying to promote so we can get more people to prosper.
You guys do fantastic work there. So yeah, let’s do that website today, folks to Texaspolicy.com. Even if you’re outside of Texas, in fact, a lot of legislators and folks from outside of Texas follow these guys because the great information and research that they put out. Vance, I appreciate you, man. Hope we get to do a Patriot Academy in person this year and get you back for that minimum wage game?
Yeah, count me in. And I love to be on the show again sometime soon.
Appreciate it. That’s Vance Ginn. Stay with us, folks, we’ll be right back with David and Tim Barton.
The American Story
Hey, guys, we want to let you know about our new resource we have here WallBuilders called The American Story. For years, people have been asking us to do a history book and we finally done it. We start with Christopher Columbus and go roughly through Abraham Lincoln. And one of the things that so often we hear today are about the imperfections of America, or how so many people in America that used to be celebrated or honored really aren’t good or honorable people.
One of the things we acknowledge quickly in the book is that the entire world is full of people who are sinful and need a savior, because the Bible even tells us that all have sinned and fallen short of the glory of God. And yet what we see through history, and certainly is evident in America is how a perfect God uses imperfect people and does great things through them. The story of America is not the story of perfect people. But you see time and time again, how God got involved in the process and use these imperfect people to do great things that impacted the entire world from America. To find out more, go to wallbuilders.com and check outThe American Story.
We’re back here on WallBuilders Live. Thanks for staying with us. And special thanks to Vance Ginn for joining us today as well.
Alright, David, Tim, we’ve looked at some biblical perspective on this, a little bit of historical kind of how does this work in our nation. I guess there’s not a constitutional prohibition against it other than there’s really no authority in the Constitution for the federal government, certainly to do this. And even the Supreme Court used to say that before the switch in time to save nine, if minimum wage was unconstitutional, by the very same Supreme Court that then turned around and said it was okay in the 1930s. So what do we do about it today?
A Command Economy
Well, you know, I think what Vance said was really good, and that our government is adopting more and more socialistic tendencies. And that’s exactly right. And history proves, 5800 years recorded history, that the more socialistic you can become, and socialism by the way, that’s part of what is known as a “Command Economy”, where the government regulates the economy and commands, what’s going to happen, what’s not going to happen, how you make your product, how you sell your product, and what you pay for your product, and what you pay your employees. All of that always tends to a loss of liberty, and it always tends to decrease in prosperity. Now, that’s 5800 years without exception of recorded history.
So this is the kind of thing of the frog boiling in water. If you really don’t know what the free market is, you’re not aware of this. And what we’ve seen is with the growing support for Americans saying they want socialism, we’ve also seen that they don’t have a clue what that is. And they think it means being social or sharing or what, and that’s good stuff. But that’s not what socialism is. And so the more the government gets involved, the worse it’s going to be.
And it’s interesting, this is going to raise the cost for employers, which now means, okay, I got a kid just graduated from high school, he doesn’t have a clue what’s going on, and I’m going to pay him 14, 15, 16 bucks an hour? I don’t think I’m going to hire that kid. I think I’m going to find somebody who’s got more experience and wait. So what you’re going to see, as he pointed out, is going to kill entry level jobs, and it’s going to hurt minority employment as well. And so you don’t have that ability to negotiate with the individual and take them where they are, and see what their skill set is, and match that. We’re now going to treat everybody like they have the same skill set, the same knowledge, the same personality, whatever. And that’s no good.
So what happens is, when you have more of this cost to the employer, as we’ve talked about before, there is not a single business in the United States that pays taxes. You may think they do. They don’t. They pass those taxes on to the consumer.
They will raise their costs. They will raise their price. If they don’t, they will go out of business. Nobody’s going to stay in business if it costs them more to operate than what they take in.
And so now you’re costing the business owner more, so he’s going to have to raise his prices to make up for that difference. And especially, if there’s a loss of productivity, because it’s an inexperienced person who’s getting paid more, and they’re not producing as much, now he’s got a double the rising cost because he can’t produce as much and as much higher costs.
So what this does is really hurts the economy. And we just need to understand when, you know, out of the compassion of my heart, I want people to be paid more.
Oh, no, that’s not the way it works. That means you’re going to be paid more. You’re going to have greater inflation. You’re going to have greater tax base because the government’s going to take more money away to be able to fund all this stuff. This is just not a good deal. It’s not a good policy. And as Tim pointed out, it’s not even a biblical policy. So constitutionally, conservative-wise, biblical-wise, this is just not a good deal.
The Practical Application
Well, I must point out to the very practical application of this. Whenever we talk about raising the minimum wage, I mean, dad, everything you’ve just said, absolutely spot on. To bring this home, when you raise minimum wage, what’s going to happen is the cost of a gallon of gasoline is going to go up, the cost of milk is going to go up, the cost of bread is going to go up, the cost of a burger is going to go up. All of a sudden, you feel like you have more money in your pocket, except that money doesn’t buy you any more gas, any more food anymore drink.
You can’t buy now all of a sudden, all these new clothes. It doesn’t do any good, even though you’re making more money, because it’s decreased the value of the buying power of the dollar, because the cost of goods will go up to match the cost of the increase of wages. And that’s why it never makes sense for the government to come and impose these kind of standards.
Is Minimum Wage A True Cure? – With Dr. Vance Ginn
Alright, guys, we are out of time for today. Thanks to Vance Ginn for joining us today. I hope that you’ll look into this issue as always. I mean, whether it’s minimum wage or some other policy, always looking at it from a biblical, historical, and constitutional perspective. If you want to have the right position on things, that’s the only way to do it. And it’s better for our communities, our states and our nation. That’s what we’re about here at WallBuilders. Hope you’re enjoying these radio programs. Hope you’re sharing them with your friends and family.
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