A news service for the people of Michigan from the Mackinac Center for Public Policy

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Politics Prevailed With Michigan's Minimum Wage Increase

Event today will discuss ways to mitigate the harm caused by the forced wage mandate

Republican control of Michigan’s government didn’t prevent a minimum wage increase and an increase in taxes may be coming to fix Michigan’s roads.

That’s left many wondering whether the GOP got outmaneuvered or was painted into a corner to prevent a minimum wage ballot initiative that would have been worse.

It was both, combined with plenty of politics, wrote Joseph Lehman, president of the Mackinac Center for Public Policy, and Michael LaFaive, director of fiscal policy at the Center, in a recent Wall Street Journal column:

Careful economic analysis did not lead the Michigan GOP to hike the minimum wage. Instead they implemented a two-pronged political strategy that local observers will be arguing about for years. Republicans didn't just pass the plan, they passed it with large enough majorities to implement it immediately, and for one very specific reason: to undermine a ballot initiative that would have increased the minimum wage to $10.10 an hour, indexed to inflation, including the same higher amount for tipped workers. 

The second part of the equation, they wrote, is that Gov. Rick Snyder "reportedly secured a promise from Democratic leaders that in exchange for the $9.25 minimum wage the minority party will supply votes for a $1.5 billion increase in the state's fuel taxes to repair roads and bridges."

So taxpayers get hit twice. And it’s happening without any attempt from the GOP-controlled Legislature to rein in spending on programs that have proven to shift tax dollars at best, and waste them at worst. Lehman and LaFaive continued: 

For instance the state still lavishes $50 million in direct cash subsidies on movie makers and another $250 million in support of the state's corporate welfare programs. Privatizing some prison facilities could save tens of millions, according to our research at the Mackinac Center. But the difficulty of cutting special-interest spending is so great that even a large tax increase seems preferable to the GOP.

GOP legislators could take a cue from their Democratic counterparts and go on the offensive, Lehman and LaFaive wrote. 

In doing so, taxpayers might be put at the top of the list of considerations rather than the special interests.

The Mackinac Center is hosting a discussion about how to mitigate the damage caused by the increase in the minimum wage at noon today in Lansing. James Sherk, senior policy analyst in labor economics with the Heritage Foundation, is the keynote speaker. To watch the event online, click here.

Meet James Hohman, Assistant Director of Fiscal Policy at the Mackinac Center. James discusses his latest project, an analysis of Proposal 1, the proposal on personal property tax reform that will appear on the August 5th ballot. Read more about Proposal 1 here: http://www.mackinac.org/20246


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