Friday, February 10, 2006

Maine, the Minimum Wage, and Tax Breaks for Film Companies

The Maine House, at Governor Baldacci's urging, has passed a plan to increase the Maine minimum wage to $7/hr by 2007. Senate passage seems likely.

This, right on the heels of an excellent study of what happened when "living wage" legislation was implemented in Santa Fe:

Dr. Yelowitz found that the likelihood of unemployment for employees in Santa Fe went up by 3.3 percent. For less-educated employees, however, the results were much higher, with their likelihood of unemployment increasing 8.3 percentage points. In addition, the usual hours of work fell by 1.0 hours for the full sample and 3.2 hours for less-educated individuals...

...Santa Fe's living wage increase led to significant and negative consequences for employees in the city-particularly the least skilled employees. The increased likelihood of unemployment and a decreased number of hours worked were all highest for low-skill employees. Furthermore, there is significant evidence to suggest the displacement of adult employees by unmarried high school age employees. These are all unintended consequences that should give pause to any claims of success of the ordinance.

In a nutshell, minimum wage laws hurt poor folks. This is not really a surprize to anyone who has taken Economics 101. The only utility of minimum wage laws is to make the people who pass them feel good about themselves, even tho they are hurting the people they profess to help. Of course, these are the same people who stand ever ready to increase social programs, and thus dependency on the dole, for those poor folks whom their minimum wage legislation is hurting.

The best way to help poor people increase their income is to increase the number of jobs that need workers. The best way to do that is to lower the cost of doing business in Maine. For all businesses, not just the few that are politically connected or favored.

This leads us to the proposal to create special tax breaks for the film industry in Maine. Why the folks in Augusta feel they are any more enlightened than the folks living and working in the real world, I'll never know. By definition, if you give one industry tax breaks, all other industries are being treated less favorably. It should be the goal of the legislature and the governor to lower taxes dramatically for all Maine businesses, not just for celebrities who are making their millions.

Don't get me wrong: I don't begrudge the filmmakers their earnings. And I think it would be a wonderful thing for more films to be shot in Maine. But don't do it on the back of the little guy (namely, me). Let's lighten the load for everbody, not just for the folks who can get the pols to give them "incentives" or "tax increment financing."



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