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March 14, 2013

“…and the soothsayer say…..beware the Ides of March”

Chris Cavey

Is history replaying itself? Should citizens keep a wary eye upon the Maryland Senate as we approach Idus Martii? Will Maryland's businesses and economy fall victim to a stabbing and eventual death, as did Caesar that mid-March in ancient Rome? We will soon know.


The Maryland Wage and Hour Law (SB683), has a gang of 25 senators already sharpening their knives. It is likely this gang will grow in numbers as the date of the final vote approaches. These representatives of the people are about to stab our fragile Maryland economy with a mandate which will increase hourly wage at an alarming rate. It will be the consumer who will suffer, in particular, the minimum wage earners these poor deluded senators seek to help.


The proposed law would raise the minimum wage in Maryland to $8.25 starting July 1, 2013, and increase that limit by about one dollar each year until July 1, 2015, when it would be $10 per hour. It also brings into play mandated overtime pay to new classes of businesses, which currently are not burdened with such requirements. Overall, it increases the expense side of the ledger to all businesses with minimum wage employees.


Certain principles exist in the business world. A primary one is – if you are not profitable, you are out of business (unless you are a government authority). Another tenet is, as expenses go up, so do the charges for your services, goods or product. Otherwise, you are not profitable and out of business. Lastly, big businesses are accountable to their investors who demand profit, and small businesses are accountable to their creditors and families who demand profit.


Most legislators have only had experiences related to government and the notion of revenue from citizen's taxes being a constant and consistent source. Few have ever had to operate a budget for a small business and understand the cause and effect of government mandates and interference.


They need to understand that you cannot tax or demand financial mandates from a business. Successful taxpaying businesses understand the balance sheet. When government demands revenue – or mandates expenses – the business will increase proportionally the income side of the balance sheet to maintain profit margins.


In other words – businesses will just charge the consumer more.


The businesses, which employ the largest percentage of minimum wage earners, are typically businesses that directly affect the household expenses of those minimum wage earners. Think about it. Agricultural industries, fast food, and large stores such as Wal-Mart are prime users and primary suppliers for the low-end wage earner.


Such a dramatic increase in minimum wages over the next two years will spiral the cost of consumer goods in Maryland, leaving the low-end wage earner in the same proportional space. It is government created inflation.


Currently 20 states have a higher minimum wage than Maryland. Seven are set at a static limit, which is less than the increase proposed for July 2013 by our legislature. Thirteen others are directly connected to the cost of living in that state or tied to its Consumer Price Index. These controls keep a balance in the states’ economy.


Maryland is, as always, making strictly a political decision 20 months prior to an election.


Those in the Maryland General Assembly who would vote for this bill are continuing the impoverishment of our society. This bill will continue to drive employers from Maryland, while forcing those who stay to increase prices. At election time they will tout the fact they put additional money into the pockets of the poor, but will be blind to the fact they increased the cost of living on those same constituents.


They are just buying votes, unconcerned about the future. One day amidst the coming hyper-inflation the working poor will wake up and realize they have been duped for many years by those they have trusted the most.


"There are no tricks in plain and simple faith.” William Shakespeare, Julius Caesar.


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