Author - Speaker - teacher
Jobs up in smoke
In 1979, I swore off cigarettes for good. In 1983, I sold my businesses and swore off ever employing anyone again. One habit was killing me physically, and the other, thanks to ultra-liberal government policies favoring employees, was killing my business.
Now, along comes President Bill Clinton with a glaring example of how government's addiction to liberal policies causes an employment cancer eating away at the learning of job skills by young Americans. At the same time, he wants to continue liberal belief that government should be nanny to teens, protecting them from the evils of tobacco.
Clinton recently announced that he wants to raise the federal cigarette tax by $1.15 a pack. He says it is a way to cut down on teen smoking. He surmises that teens will not have enough money to buy the more costly cigarettes.
His assumption that teens will go broke buying cigarettes must come from living in the rarefied world of career politicians who spend their days in smoke-free buildings. I have noticed that teens always seem to find a way to buy $150 tennis shoes, $100 Starter jackets, and pay $75 to have their ears and spirits blasted at rock concerts. Far too many have found thousands of dollars to support their drug addictions.
A $1.15 a pack price increase will not stop them. They will find a way.
The only impact of raising the cigarette tax will be to fatten the coffers of the federal government so it can pay for the increased number of laid-off, entry level workers, the direct result of another one of President Clinton's newest ideas.
The President, in his State-of-the-Union address, suggested raising the federal minimum wage another dollar per hour on top of the just recently implemented increase. He believes that raising the minimum wage will improve the earnings of tens of thousands of American citizens, especially those trying to support families. While he never considered it might just provide enough more money for teens to pay the increase in the cigarette tax, there is a far more serious implication of this predictable policy.
The facts show just how much both of these ideas are filled with blue smoke.
Every credible study of employment trends related to minimum wage increases clearly demonstrates that for every 10 percent increase in the minimum wage there is a subsequent loss of 1-3 percent of entry level jobs. For the most part, these losses occur in small businesses, like the one I previously owned, where profit margins are razor thin, minor economic fluctuations can harshly effect business survival and any increase in overhead is too often siphoned off from the personal earnings of the beleaguered business owner.
So entry level jobs are cut and replaced with something more productive.
I noticed a direct result of this a few years ago while visiting the local McDonalds. All the french fries were being cooked by a robotic arm. The clerk said they named it "Bob." Bob was a very cooperative employee - never sick, always showing up on time and he received his "medical treatment" only during closing hours. Bob is the ideal entry level employee who earns back his entire "cost of employment" in, perhaps, six months.
Bob the french fryer is evidence of the genius of business to adapt and an indicator of what happens to human french fryers if their costs become too high for their employers.
According to the Employment Policies Institute, just since the 1997 round of minimum wage increases, more than 128,000 entry level jobs have been lost. I have no statistic on whether there has been a comparable rise in the use of new robotic french fryers.
On the one hand, President Clinton thinks raising the price of a product will reduce its sales. On the other, he thinks that raising the costs of goods and services will have only positive effects.
Perhaps when the President is done tinkering with taxes and business economics, the only affordable employment which will allow teens to keep smoking will be as designers of robotics used to replace their former fellow entry level workers.