I recently wrote about Maryland's misguided social engineering efforts in their quest to force Wal-Mart to pay a higher percentage of its payroll towards healthcare costs for its employees. Although many would argue that employers should pay more, I fail to see any rationale for only forcing this upon Wal-Mart rather than all employers or perhaps all employers with more than perhaps 50 employees. Others would argue that if providing healthcare benefits to Maryland citizens is so important to the Maryland legislature, then the legislature should fund their social engineering project and follow the lead of Oregon in implementing a universal healthcare program.

Today, let's address another misguided effort by Maryland to ostensibly shift wealth from employers to employees. Maryland's legislature recently overrode the veto of Gov. Robert L. Ehrlich Jr. (R) and voted to raise the minimum wage from $5.15 to $6.15 per hour. While few would argue that more people making more money is a bad thing, the problem with increasing the minimum wage is that doing so increases the costs to employ those people. Given our increasingly interstate and even global economy, when we increase our costs of production we increase the incentive to employers to export those jobs to other states or to other countries. And even if the jobs are such that they will not be exported, the increased cost to the employer will end up being paid by consumers or the employer's shareholders or both. If by consumers, then the standard of living in Maryland just dropped. If by shareholders, then the employer's shareholders will see a lower rate of return on their investment, which will increase the cost of capital to that employer which will make it more difficult for that employer to hold the line on price increases, add new facilities, employ more people, etc.

Years ago, states could increase the minimum wage without having to worry about the negative consequences because those consequences were few and insignificant. Today, those consequences are very real and very serious. While those employees who see their pay increase by $1 per hour will no doubt rejoice, the rest of those in Maryland should be concerned. In fact, they should be very concerned about the lack of wisdom being exhibited by their elected officials.