Localize Minimum Wage to End Off-Shoring

I read an article earlier today about wage theft and how much worse it is with the recession.  If you're not familiar with the concept, "wage theft" is the term given to actions taken by employers to deny workers their rightful pay.  This comes in the form of denying overtime, paying less than minimum wage, and paying less than agreed for the work performed, as examples.  The article focused on the issues immigrants, legal and illegal, face with wage theft given their vulnerable status; even legal immigrants fear deportation if they confront their employers.  It also mentioned that this is primarily an issue of low-wage industries.

I bring this up because the article stated how many are calling for the Federal government to "step up enforcement", and it mentioned that many cities and states have had to combat wage theft in the absence of Federal regulation.  I don't claim to be an expert on the Department of Labor, and I'm certain I have some research to do here.  I'm posting this as a lead-in to what I hope will be further discussion.  That said, my opinion is that this is not a Federal issue; this is a local issue.

It seems to me that the Federal government should only be concerned with wage theft if the offenders cross state lines.  Two examples would be companies that hire employees in multiple states, and travelling carnivals that cross state lines.  Essentially, the state and local governments are more than capable of dealing with the enforcement of wage laws.  I understand that minimum wage and many of the wage laws being broken are Federal laws, and therefore it would fall to the DoL to enforce them.  Absolutely.  But why are they Federal laws?  Why do we not have localized minimum wage laws?  Think about it.  The cost of living is not the same in San Francisco, CA, and Beaufort, NC.  Why is the minimum wage the same?

Why do we have a nationwide minimum wage instead of legislation that says something to the effect of, "each state will create and maintain a system for determining the minimum wage within its borders."  Period.  Done.  Then the states can decide if they want this to be handled by their state legislature or if it should go to more localized governing bodies.  That would be their choice.  They could set up the guidelines that work within their own subcultures, and the minimum wage would be more in line with the local cost of living.

With a locally set minimum wage, we would create competition between states.  On the one hand, if you set your minimum wage too high, businesses will leave the area unless the state has other incentives to overcome the high wages.  Some areas have advantageous corporate taxing structures; others have a highly educated and skilled labor force that can demand higher wages.  On the other hand, if you set your minimum wage too low for the cost of living, residents will leave in search of better paying opportunities.  This will act as an incentive for the state to adjust the minimum wage or, as an example, create educational opportunities so that a skilled labor force can attract higher-paying jobs.

The increased competition for a good balance of wages, taxes, and other benefits will force the US citizenry to accept that we demand entirely too much money for unskilled labor.  We hear complaints all the time about how our jobs are being sent overseas where wages are lower.  We hear about illegal immigrants taking jobs because they work for less than minimum wage.  We hear about how rising prices in America are making it harder for parents to provide for their families.  Then we hear about how the minimum wage is going up again.

Let's break this down.  The minimum wage goes up, so the companies have three choices: raise prices, find cheaper labor, or make less money.  You can be sure they're not going for option three.  If we had local minimum wages, though, option two would still include the US and US citizens.  Wages getting out of control in Utah?  Time to move to Colorado.  Your family depends on this job?  You can probably follow it.  Yes, you'll be making less, but it's likely because the cost of living is less.  You get the idea.

For now, yes, the DoL needs to enforce the regulations in place.  I would even love to see a list of employers convicted of wage theft posted for all to see.  These unscrupulous people would have been hung in the town square at one point in time, but for now I'll settle for paying what's owed and a fair amount of public humiliation.  In the future, though, we need to decentralize the minimum wage.  It is rightfully the responsibility of the local governments to address these issues.

Thanks for reading,
-MK