Aldo hits bottom, keeps digging

Background: State Representative Aldo Vagnozzi sponsored a set of bills to impose Soviet-style policies to Michigan's labor market.

Apparently State Representative Aldo Vagnozzi and other legislators won’t quit until they destroy Michigan’s business climate. Seven years of job losses weren’t enough to stop Vagnozzi from voting for an irresponsible tax increase. Not satisfied with rock bottom, he wants to keep digging.

On February 12, state representatives passed House Bill 4627 which would establish a "commission on pay equity" to basically set wage levels. The bill is associated with HB 4625 which would prohibit paying a person a wage or salary that is less than what this commission would deem adequate.

The commission would consist of a Who’s Who list of special interests responsible for defining what wages are considered “equitable.” Lawrence Reed, president of the Mackinac Center, has pointed out that imposing such restrictions on private business "would arbitrarily and effectively abolish the role of supply and demand in the labor market."

Pay equity, also known as “comparable worth”, refers to the idea that individuals who perform different but “comparable” jobs should be paid a similar wage. For example if a sanitation engineer’s “worth” is considered comparable to a state representative’s “worth”, they should receive equal pay.

Such a concept sounds appealing since everyone wants to be paid what they think they are worth. However, the laws of economics don’t care what you think. Wage levels are determined by supply and demand in the marketplace. In turn, those wages send out a signal to laborers – low wages signify the supply of labor in an industry exceeds demand and workers seeking higher wages should move into other lines of work. Trying to circumvent this natural process using a central committee to arbitrarily set wages will distort the labor market as demonstrated in Minnesota.

In 1984, Minnesota passed a law mandating that local governments pay “comparable wages.” The law created turmoil in St. Paul where the city faced numerous disputes over who was comparable to whom and cost an additional $32 million in salary expenses between 1985 and 1992. Also, the law suppressed wages for nurses contributing to a statewide shortage.

Companies already avoid Michigan’s overbearing labor unions and open manufacturing plants in right-to-work states. What company wants to relocate to a state where wages are determined by a committee of special interests? A recent CEO Magazine survey reveals that CEOs consider Michigan to be the third worst state in which to do business. Apparently, Vagnozzi is shooting for number one.

[Letter to the Editor - Farmington Observer. Published 02/24/2008.]