Those who think Michigan’s high unemployment rate and weak job climate will improve soon, better think again.
On October 1, 2006 Michigan’s minimum wage will change from $5.35 to $7.15 per hour. This 30% increase in the minimum wage will force small businesses around the state to adjust to changing costs. This alone is likely to drive more people to the unemployment rolls – especially the young – but that’s just part of the problem. Today corporate exemptions allow individual companies to employ workers for more than forty hours a week without paying overtime (time and a half). It is important to note that key industries, including the auto industry, operate under a commission system in which greater production is encouraged. Thus, it works to the advantage of the employee to work a greater number of hours per week in order to maximize earnings under the commission system. Unfortunately, unless Governor Granholm and legislative democrats come around, these exemptions will be lifted when the new minimum wage law takes effect. This blunder will result in firms placing tighter restrictions on worker hours, and will thus decrease production and net earnings.
It seems unreasonable and completely political for the Governor to defiantly stand against Republican efforts to foster a stronger business environment. Ironically, despite her assertions, Governor Granholm’s plan to enhance business does just the opposite as she is lowering production and raising costs.
In addition, without exemptions many of the new workers likely to be hired under the new rules will not be as able to produce at the rate that more experienced employees would be able to. While we certainly want to increase the number of jobs within the state and improve upon our miserable unemployment rate, we must not attempt to foster this development by stifling business growth since it most likely will drive our jobs elsewhere.
Another devastating side effect of these Democratic efforts is the movement of Michigan businesses to Canada, Mexico, other states, and even overseas. Why would a firm want to stay in Michigan and lower production if it could easily move elsewhere and increase production as well as earn far greater profits? The net effect of this will actually decrease the number of jobs.
Eliminating exemptions will not only harm businesses but will hurt Michiganians. Unemployment rates will not go down due to outsourcing. Furthermore, current employees stand to lose, as they will be restricted in the amount that they can work. Even though the minimum wage is increasing, individual salaries will not see an equal rise, as individuals will be forced to work fewer hours. It is simply not fair to the skilled Michigan worker to limit his or her potential for earning a decent living.
Michigan’s economy is already weak under Governor Granholm’s ineffective leadership. Continuing to work against efforts to encourage business growth is contrary to any mission to improve our economy. In fact, it will just make things worse which is why Michigan needs new Republican Leadership now. We need Dick DeVos as Governor.