Shugars’ Vote Correct on Minimum Wage

       Feb. 16 columnist Charlotte
Channing reported that Democrats plan to use state Sen. Dale Shugars’,
R-Portage, vote against an increase in the minimum wage to target him
in next year’s election campaign.

       She quotes Michigan Democratic
Chariman Mark Brewer saying, “Today, Dale Shugars cemented his reputation
as an extremist” by voting against the minimum wage increase.

       What is “extremist”
about not forcing workers with few skills into unemployment? When did
protecting employment opportunities for the poor become an “extremist”

       There is no great mystery about
the effect of minimum wage laws — over the long term, their net effect
is to raise unemployment for precisely those workers who, due to a lack
of skills, most need jobs.

       People such as Brewer make
a faulty assumption about raising the minimum wage. They assume that if
a business employes 10 people before a minimum wage increase, it will
continue to employ 10 people after the minimum wage increase. In some
business this will occur, but in most the owner will find a way to eliminate
employees until his labor costs are as low as what they were before the
increase in the minimum wage.

       One way an owner can do this
is by replacing human beings with machines. A machine that might not have
been cost effective when an employee was paid $3.35 an hour merits a second
look when the employer is forced to arbitrarily raise wage rates to $4.75
an hour.

       Other business will respond
by eliminating or consolidating positions, and not expanding their hiring
as quickly as they would have before the rise in minimum wages. Downsizing
is already prevalent in many industries, minimum wage laws only accelerate
that tend.

       Even when businesses don’t
reduce their staffs, the raise in minimum wage hurts people with few skills
by making low skill jobs attractive to more highly skilled people. Kalamazoo,
for example, has many college students in its job market. As the minimum
wage rises to $4.75, they will tend to compete more for jobs which seemed
unattractive at $3.35. The result, which has been documented by several
studies of states which raised the minimum wage, is to benefit workers
from middle class families at the expense of workers in poor families.

       Yet those who propose raising
the minimum wage portray themselves as the ones who care and are compassionate
about the working poor, while those, such as Shugars, who oppose a measure
harmful to the poor are excoriated as “extremists.”

       If indeed Shugars is an “extremist”
for opposing a measure which hurts the working poor, then what this state
needs is more extremists in the state Senate.

       This article originally appeared
in the Kalamazoo Gazette.

Free the Athletes – Scrap the NCAA

A group called Trial Lawyers
for Public Justice is suing the National Collegiate Athletic Association
(NCAA). The group claims that the use of Scholastic Assessment Test
(SAT) scores to decide who can play college sports discriminates against
black athletes. The real problem, however, is that the NCAA is a cartel
that harms the interests of all athletes, black and white.

The NCAA’s main goal is to reduce
the labor costs to member schools by providing athletes who earn next
to nothing, while bringing in millions of dollars in revenues to member
colleges and universities.

In its lawsuit, the trial
lawyers group notes that students who fail to achieve high SAT scores
are still eligible to act in school plays or any other assortment of
extracurricular activities. Somehow college drama clubs manage to survive
without any sort of national governing body. Why are sports different?

Because sports, unlike other
extracurricular activities, can earn millions of dollars for their universities.
The huge sums of money involved, however, put universities and colleges
in a bind. Only a small number of talented athletes are available. If
colleges were alllowed to compete for players by offering them salaries
commensurate with their abilities, labor prices for athletes would quickly

The solution colleges have
agreed on is one diverse groups — from oil-producing nations to grain
producers — have tried at one time or another.

They have formed a cartel.
In this case, the heart of the cartel is an agreement between colleges
never to offer players anything more than a scholarship as compensation.
Since the stakes are so high, though, each school has an incentive to
cheat, as scandal after scandal of players getting paid with money and
other gifts has revealed. The primary job of the NCAA, then, is to enforce
the agreement.

In most industries, this
conduct would be highly illegal. Executives who conspired to artificially
lower the wages of their workers would likely find themselves in court.

To convince people to support
its cartel, the NCAA trots out arbitrary SAT requirements and appeals
to the academic mission of the university. Intercollegiate athletics
long ago passed from the real of normal extracurricular activity to
a huge money-making machine. All the NCAA does by imposing the SAT and
other academic requirements is give kids with few options even fewer
options by denying them a chance to show off their talents.

The sad thing is that the
NCAA cartel doesn’t necessarily save schools money as much as it shifts
that money around. Consider the Division I football champions, the University
of Florida. None of the players for Florida earned anything more (officially,
at least) than their scholarships. Yet Florida head coach Steve Spurrier
earns $1.1 million a year. All the NCAA does in Florida’s case is take
money that would otherwise go to players and instead give part of it
to the coaches, who are allowed to have different universities compete
for their services by offering higher salaries.

This bowl season, games paid
out an astounding $200 million, none of which can be given to any of
the players responsible for the wins without violating NCAA rules.

Some people are concerned
that paying athletes to play would hurt already low graduation rates
among athletes. In fact, according to the NCAA the graduation rate among
athletes is already higer than among the general student population.

The problem wth graduation
rates — fewer than half of the students who enter a four-year university
as freshmen ever receive their degrees — is a probem endemic to the
particular way American higher education is financed and administered.
Paying players is unlikely to affect it either way.

What paying players would
do is free them from a system in which they do most of the work and
assume all of the risk, yet are prevented from sharing in the results
of their labor. The best way to accomplish this goal is to get rid of
the NCAA.

Postscript: in the summer of 1997, University of Florida football
coach Steve Spurrier signed a contract paying him a reported $2 million
a year. His players are still legally forbidden to accept any compensation
aside from their scholarships.

This article originally appeared in the Detroit News.