There’s an old tale about a guy in a boat who sees that he’s starting to sink. He looks down and notices that there’s a hole in the bottom of his boat that’s letting water in quickly. Panicked, he pulls out a drill and starts drilling more holes in the bottom of the boat to let all the water out.
Wisconsin Senate Democrats went to Home Depot and bought a drill on Thursday. With the state expecting unemployment to hit 8% later this year, the Senate Dems introduced a package of three bills that effectively yank the life vest away from any business hoping to stay afloat. Their three bills, meant to help “working families,” do the following:
- Index the state minimum wage for inflation
- Make businesses pay workers before they pay off their debts to banks when they go bankrupt
- Mandate health plans cover autism for children
If the Legislature were to actually walk on to the floor and vote for a bill to reduce the number of jobs in Wisconsin by 5%, it probably wouldn’t be as effective as these three bills in unison.
Everyone knows the argument on the minimum wage. People who make the minimum will make slightly more, but companies will have to cut the number of employees they have to make up the difference – especially in a bad economy, when so many companies are struggling to stay afloat.
Don’t believe me? Then let’s ask that simmering hotbed of conservative, free market economics: the University of Wisconsin System. In a previous session, when legislative Democrats tried to raise the minimum wage from $5.15 to $6.80 per hour, the UW issued a fiscal estimate that said the following:
The total student cost increase represents 5.5% of the total amount budgeted for student and limited term employee wages. The $5,225,573 cost would result in approximately 768,500 fewer hours of employment in the UW System for students and limited term employees.
Even the UW System can draw the line between increased wages and decreased employment. This sudden conversion of the UW to market realities is only slightly less likely than Vladimir Lenin picking Sarah Palin as his running mate.
In fact, we don’t even have to go back a week to find out what onerous government regulation does to employment. This week Milwaukee Journal Sentinel columnist Patrick McIlheran described the plight of Capitol Stampings, a company partially based in Milwaukee, that was recently looking to hire more people. Or, used to be looking, at least:
But the ordinance makes Milwaukee workers more expensive – another $100,000 a year for Capitol, Wenzel estimates. “We’d very strongly consider moving that work,” said Wenzel. He’d rather not: He serves on a group promoting the 30th St. industrial corridor. Still, “we just can’t pass that on to our customers,” not when the plant competes with China.
Businesses will adapt. “I have a way around it, if I really want to,” Wenzel said, though it may mean fewer paid holidays – or new jobs in Hartford.
The other two bills, while admirable in spirit, also damage job creation. The wage claim lien bill will make it more difficult for banks to loan money to business startups, if there’s less certainty they’re going to be paid back if the business hits a rough patch. Similarly, the autism bill will increase the cost of health care by adding another mandate to plans in the state. As such, businesses will deal with the increased cost by offering lesser health care to their employees or scaling back payrolls. It’s almost as if Senate Democrats are trying to make offering health care as onerous as possible in order to create a need for their unpopular government-run universal health care program, Healthy Wisconsin.
When mixed together, these bills constitute a noxious cocktail that the Wisconsin economy is going to have to swallow. It appears Senate Democrats are poised to punish the very businesses that can pull us out of this recession – akin to treating a patient’s broken leg by making him drink Clorox. These are the same legislators who have dug the state a $5.4 billion deficit. Makes perfect sense that they know how to manage small business finances, no?
The wage claim lien bill will make it more difficult for banks to loan money to business startups, if there’s less certainty they’re going to be paid back if the business hits a rough patch
Wrong.
Bank lending (admittedly now oxymoronic) is almost ALWAYS fully secured by hard assets such as real estate, buildings, equipment, etc. There are no “unsecured” loans for startup businesses.
And “unsecured” loans are made if and only if there is a personal guarantee signed by someone with MAJOR net worth above and beyond the loan’s amount.
You should re-check your sources on this one, Chris.
Comment by dad29 — January 9, 2009 @ 9:44 am
A wage claim lien takes precedence over a prior lien of a commercial lending institution as to the first $3,000 of unpaid wages covered under the wage claim lien that are earned within the six months preceding the filing of the wage claim with DWD or the commencement of an action by the employee to recover the wages due. Wisconsin is the only state in the country with such a strong worker’s-rights wage lien law.
This bill eliminates that $3,000 cap and six?month time limit so that under the bill a wage claim lien covering any amount of wages earned at any time takes precedence over a lien of a commercial lending institution, regardless of whether the lien of the commercial lending institution originated before or after the wage claim lien takes effect.
Given the ailing economy and with a combination of regulatory scrutiny and investor wariness, lending standards have tightened. That means that changing the lien priority amounts (to be unlimited) will make underwriting very problematic. Given these dynamics, that last thing you want to do is make it even harder for businesses to qualify for the loans they might need to survive.
That’s from the bankers. I think they know a little about how the system works.
Comment by Christian Schneider — January 9, 2009 @ 10:08 am
Well clearly, I’d expect Schneider to support the banks over the workers. Let them eat cake. That the banks and their recent bailout is being paid by those workers matters not. And requiring that autism be covered? Shame on the Dems. What are they trying to be, compassionate?
Comment by Jack Lohman — January 9, 2009 @ 11:24 am
Jack – what a stunning lack of insight for you – even moreso on this.
That autism bill is downright cruel; while on its surface it seems compassionate, the reality is that it is going to cause a lot of disappointment for a lot of people while the therapists and schools and laugh all the way to the bank.
Your anti-insurance blinders have really gotten the better of you this time.
I’m reposting my comments from B&S here (sorry, Chris, but I’m not going to continually retype my rebuttals to this legislation all over the intertubes):
“That autism bill is a steaming pile and WILL NOT do what its proponents think, or worse, promise, it will do.
Screw the cost – I’m willing to cede the point that the cost is negligible for the sake of argument. But the larger issue is that it will only apply to about 30 percent of employees in Wisconsin.
If you work for Harley-Davison, Miller Brewing, General Electric, or any other large employer, this bill would not provide insurance coverage for your autistic child’s treatment.
That’s because those firms self-insure and are regulated by federal ERISA regulations, not state insurance regulations.
If that bill becomes law, there will be hell to pay for those legislators that made these promises – knowing full well that this bill CANNOT live up to those promises.”
And:
“Schmitz, you clearly don’t get it. I mean, really don’t get it.
“Maybe so, but it’s a start. Better than doing nothing. And by offering it to some, the others may follow along.”
How about we just fund the state program that actually pays for the treatment? That’s what Assembly Republicans tried to do last session, but Democrats didn’t want to go along. Russ Decker didn’t want to go along.
If government doesn’t exist to help the least fortunate and the most struggling in society, what does it exist for? You see, your knee-jerk reaction is to put this onerous new burden on the private sector, whereas the thoughtful person realizes that autism treatment is what government can and should do – because of the general rarity of autism.
For someone who has repeatedly declared that capitalism has failed, you sure do put a lot of faith in it. I, on the other hand, recognize that in the context of government mandates, capitalism won’t respond and adjust well to mandating insurance coverage for such a small segment of society.
Moreover, as noted earlier, this mandate only applied to 30 percent of employees in the state. By fully funding the government program charged with providing the treatment, then we can get all 100 percent of children covered.
And see, Jill? A little thought and you’d quickly realize that it isn’t an either or northing proposition. Opposing the legislation does not mean supporting the status quo, it means that, unlike Senate Dems, some people aren’t doing this a sop to special interests and using it as a game to box in their political rivals.
Decker, Robson, et al, know exactly that the autism bill doesn’t solve a problem, yet they remain opposed to a real solution. They are disgusting people that would rather bat around autistic children and their families to score political points.
And be sure to call the Governor’s office and ask him why he defunded the program that provides treatment for autistic children.”
And:
“”i Remember the entire Assembly chamber packed With Autistic Parents and Supporters wanting this Autism Bill Passed.”
If autistic parents are leading productive lives and procreating, surely they don’t need intensive therapy, then.
However, I know what you meant and the point doesn’t change.
Vote on it, don’t vote on it. It doesn’t matter; the result will be the same – THE LEGISLATION DOESN’T DO WHAT THE POLITICIANS HAVE PROMISED IT WILL DO.
But the parents and families of autistic children have been sold a bill of goods. This bill is about $$$$. For school districts, for therapists, for clinics… Insurance pays higher rates of reimbursement than does the government. THAT is why politicians and therapists and schools didn’t (and won’t) want an alternative bill passed.
Where’s Jack Lohman on this???”
Comment by Publius — January 9, 2009 @ 11:44 am
Publius, I can’t believe I’m reading this from a Republican politician. “How about we just fund the state program that actually pays for the treatment?”
Sort of sounds like Healthy Wisconsin or BadgerCare!
“If government doesn’t exist to help the least fortunate and the most struggling in society, what does it exist for?”
And
“I, on the other hand, recognize that in the context of government mandates, capitalism won’t respond and adjust well to mandating insurance coverage for such a small segment of society.”
Wow!!!
I will admit to not knowing as much as I’d like on the Autism bill, and you probably know more. BUT I DO KNOW POLITICIANS! And the majority of them are corrupted by the moneyed political system. The truth is that IF we got the private money out of the political system these issues would be passed in the most efficient manner possible. But that money is transferring hands, we cannot trust politicians to do the right thing. You are in a position to fix it. DO IT!
Comment by Jack Lohman — January 9, 2009 @ 12:12 pm
Jack –
There is no greater insult to me than to call me a politician.
I wish I was in a position to fix it – believe me, I would try (but chances are, you wouldn’t like the way I do it).
I’m merely a recovering junkie with a family. I’m out of the game.
Comment by Publius — January 9, 2009 @ 12:25 pm
Well, you’ve never denied being a politician, or even an ex-politician. Nor have you ever disclosed what your true interests are, though you know mine. But whether you are or are not a politician I can understand that it would be an insult. They are not high on the list of trustworthy people.
And No, I wouldn’t like the way you would solve it. You like the free-for-all market, even for politicians on the take. I realize that our moneyed political system has dug us into a hole, and I don’t want to dig it any deeper.
Comment by Jack Lohman — January 9, 2009 @ 1:05 pm
Jack,
You are as demented as politicians are corrupted. You have but one song to sing, unfortunately, it is about as pleasant and inspiring as listing to Roseanne Barr signging the National Anthem.
Comment by JackOLantern — January 9, 2009 @ 1:08 pm
Well, Jack, consider this my official denial of being, or ever having been, a politician.
(Sorry for the diversion of topic)
You see, Jack, the problem with politicians that claim to be free-market is that they are too-willing to be led by the nose by their special-interest benefactors who tell them that their interests (those of the special interests) are free market principles.
That couldn’t be more wrong – I abhor special incentives and tax breaks for pet industry, regardless of industry, for the same reason that I abhor heavy government regulation. Government doesn’t have – nor can it ever have – the capacity for forethought. Ergo, special incentives for business picks winners and losers while distorting price signals and social utility.
By genuinely shrinking government, you remove those distortions and the incentives of the special interests. Consider this: how many times has anyone ever asked a poor person for money? For a job? For a contract? If you don’t have it to give, you can’t give it out.
I’m sure there are true market believers out there – both in Congress and in Madison. They are usually the consistent ones. They will not support deregulation for one and not another, nor will they give tax breaks away to one and not the other.
This autism bill is a perfect example of competing special interests – insurance versus providers, conservatives versus liberals. I happen to believe that in this case, the bill is bad – not because Big Business opposes it, but because the politicians are making promises that they KNOW they can’t keep.
Comment by Publius — January 9, 2009 @ 1:30 pm
“Government doesn’t have – nor can it ever have – the capacity for forethought.”
Sounds inconsistent with your statements I quoted in #5 above, Publius.
And for the record are you saying that you are not now and ever have been a GOP staffer?
You want to shrink government, and I do too. But I’d like to get rid of the waste and keep the functions govt should do (like health care).
But you are spitting in the wind if you think you can get politicians who are being paid to grow government, to reduce it. It is not going to happen as long as private cash flows.
Comment by Jack Lohman — January 9, 2009 @ 1:42 pm
Not inconsistent at all.
Government will always be reactionary – ideas and capital move too fast to stay ahead of them. Providing services to the less fortunate is a reaction; there is no way to predict or anticipate what services the public may clamor for.
But what those services are or which segments of society are prioritized is a debate that government should have (and I would like to see). Unfortunately, Republicans have not differentiated themselves in this regard to Democrats. Both have tried (and continue to fail) to create a government that is all things to all people. Republicans have forsaken their history of thoughtful policy for an agenda of poorly worded soundbites while the Democrats have promised to give away the store. That promise can only be beaten when promises get broken (usually by reality – and the autism bill is a perfect example).
And you and I fundamentally disagree on the role government should play in providing healthcare. While philosphically I will say that it should play none or an extremely limited role, practically – as a matter of existing programs that are sacrosanct for politicians – that is not possible.
In which case, I advocate the government taking on the responsibility to provide services to segments of society that because of government-created distortions in the marketplace, those particualr segments cannot be efficiently served.
Comment by Publius — January 9, 2009 @ 1:58 pm
So, I should assume from your selective wording that you are or once was a GOP staffer. I think we are dancing around disclosure, but so be it.
The way Republicans have differentiated themselves from Democrats is by whom they each get their campaign money from, and to whom they are each beholden. We’ve reached a point in history that if we like the business agenda we vote for the R’s and if we like the labor agenda we vote for the D’s. We are now voting on the bribers rather than the politicians.
That’s too bad.
Comment by Jack Lohman — January 9, 2009 @ 2:47 pm
Unfortunately for the Republicans, their bribers tend to be equal opportunity givers. And there are some that still believe that those givers are on their side.
Everyone loves a useful idiot, yes?
To be fair to the unions, at least they only give to one side or none at all…
Comment by Publius — January 9, 2009 @ 2:57 pm
Those givers are not for equal opportunity, they know which side their bread is buttered on. They give cash because cash works. It isn’t ideology, it’s pragmatic. If they want taxpayer assets they have to bribe those in control of those assets. Good laws don’t require cash to flow, only bad laws do. That’s the very reason taxpayers must insist on public funding of campaigns. And as a family man (or woman), you should too.
Comment by Jack Lohman — January 9, 2009 @ 3:05 pm
Thanks for the legalities update Christian.
Let’s not worry about securitized/unsecuritized for a second.
Let’s just focus on that “wage” amount.
First off, is your banker-source claiming that businesses are 6 months behind on payrolls? Or is he claiming that workers hang around for 2 months, 3 months, 6 months without being paid?
Not likely, Christian.
Let’s assume that we have a good machinist–a journeyman. He’s knocking down about $25.00/hour plus bennies. $3K is 3 weeks’ wages.
Maybe that machinist hung around for 4 weeks without getting paid. You telling me that he should take $1K in the shorts? (I’m not claiming he’s smart…maybe “loyal” is a better word.
Seems to me that the Bank is not going to take a huge loss if 5 machinists claim 4 weeks’ wages ($4K each) as opposed to 5 machinists claiming THREE weeks’ wages ($3K each).
Scritchscratchscritch…$5K more to the lumpenproletariats instead of the Bank–which SHOULD have been keeping a very tight lid on the borrower anyway, right?
If the borrower is in that much trouble, seems to me that the banker has a due-diligence thing to worry about long before it got to 30 days’ past-due on wages.
Comment by dad29 — January 9, 2009 @ 4:31 pm
The Weekend Scramble Brunch, Part 1 – 1/11/2009…
Time to go deep into the archives for the weekend…
We’ve got the 7th season of Jack starting tonight at 7 pm (Central; consult your local listings for other time zones) on Fox (Channel 6/6.1 in Milwaukee, 506 on the Milwaukee-area……
Trackback by steveegg — January 11, 2009 @ 3:03 pm
If the legislature indexes the minimum wage to inflation, does that mean when the CPI goes down that there will be a reduction in the minimum wage?
Comment by Dave Kipp — January 11, 2009 @ 8:08 pm
Here’s a copy of the bill – it appears that if CPI went down, so would the minimum wage.
http://www.legis.state.wi.us/2009/data/SB-1.pdf
Comment by Christian Schneider — January 12, 2009 @ 2:20 pm
“If autistic parents are leading productive lives and procreating, surely they don’t need intensive therapy, then.”
Actually saying something like this proves ignorance which really discredits anything else you have to say.
Maybe you should take a break from living in your “political world” and try to live in the real world for awhile. Then, maybe, IF you can control yourself from making ignorant, pompous statements,you could actually make a difference with your thoughts.
Comment by mom — February 10, 2009 @ 11:54 am