During the State of the Union address last night, President Obama declared that “It’s time to give America a raise.” From there he segued into a riff on how Henry Ford decided to give his workers a raise so they could buy cars from the Ford Motor Company.
Obama’s call last night was to raise the minimum wage. He is evidently under the mistaken impression that most of us work for minimum wage — how else could raising the minimum wage constitute “giving America a raise”?
Does Barack Obama think that we’re all out here working minimum wage jobs, just waiting on him to give us all a few more bucks? Is that how he thinks the economy works?
The fact is, only about 4.7% of American workers work for minimum wage. Most of them are high school and college students working their first jobs. The minimum wage should be a temporary condition for the vast majority of them — all of them, if they obtain their education, build their job skills and stay away from drugs and other things that hurt them and their career prospects. If they perform well on those jobs, and avoid making career-limiting decisions, they will soon get raises from the companies they work for, without any intervention from Barack Obama or Congress at all.
Henry Ford was probably not the best example for Obama to use in his illustration, either. Henry Ford was an extremely shrewd businessman. He was a member of the vilified one percent. Ford’s decision to raise wages for his workers was his own to make, and even in Obama’s telling, Ford raised wages out of self-interest. He wanted to reduce turnover to keep his trained, skilled workers around longer. He wanted to sell more cars. Raising wages of his own workers so they could buy Ford cars was one way to sell more cars and keep his best workers. Those cars Ford sold to his employees also became rolling advertisements for Ford’s products.
In Obama’s telling, maybe Lear should raise all its workers wages so that they can all buy Bombardiers*…No? Why or why not? Show your work.
Ford’s raise also came with a significant invasion of privacy that we would not accept from employers today.
The $5-a-day rate was about half pay and half bonus. The bonus came with character requirements and was enforced by the Socialization Organization. This was a committee that would visit the employees’ homes to ensure that they were doing things the “American way.” They were supposed to avoid social ills such as gambling and drinking. They were to learn English, and many (primarily the recent immigrants) had to attend classes to become “Americanized.” Women were not eligible for the bonus unless they were single and supporting the family. Also, men were not eligible if their wives worked outside the home.
That’s paternalism on steroids. Is it how Barack Obama would like to run America? It would be a smiley-faced tyranny.
Ford’s brand of self-interest drives the economy. It’s the spirit of invention and competitiveness. It was also extremely heavy-handed, but employees had the choice to work for Ford or not if they did not like his rules. Obama imposes government policies — think Obamacare — that become inescapable even though the majority of the country doesn’t want them.
Obama’s brand of economic warfare and envy (which he brings up to deny in the clip) wed to his government-first approach, is what’s dragging the economy down and stifling hiring.
*Originally I wrote “Gulfstream,” but Lear doesn’t manufacture the Gulfstream.