The Minimum Wage & Punishing Success in Rhode Island: Do the politicians in RI want to destroy the economy, or are they just ignorant and inept?

Since hundreds of business owners in Rhode Island decided it was time to organize and stand up to fight for their rights less than a year ago by joining the Gaspee Business Network, many are left scratching their heads while considering the intentions of people in the Rhode Island Legislature.  It is evident that a majority of the politicians in Providence either have no real experience and understanding of how to run a business, or do have such understanding but do not care for the livelihoods of workers and families throughout the Ocean State.

It is clear to anyone who actually understands business and economics that these are the only possible reasons for the decision making in the RI Legislature.

cubicle_land_by_Bill_Abbott_of_flickr_sm.jpgStarting off in 2017, Rhode Island politicians appear bent on destroying the economy and leaving workers struggling to make ends meet with as few options for employment as possible.  With each regulation and demand placed upon small businesses, the more time and resources they must dedicate to attorneys and accountants to ensure they comply with the nonsensical and clueless laws passed each year, and this year is particularly onerous. 

Although large corporate entities easily adapt with an already established army of lawyers and accountants, smaller businesses struggle to keep up.  This is a huge benefit to larger businesses that see smaller competitors as a threat due to their ability to adapt and change to market demands more quickly and efficiently.  By forcing the diversion of time and resources away from innovation and adaptation and instead towards adapting to politically motivated laws, a huge disadvantage is dealt to smaller businesses.

When these circumstances are viewed through the lens of business and economics, it is evident that either through ignorance or design, many politicians in Rhode Island wish to drag the Ocean State even further into debt while destroying as much employment diversity as possible for working families.

serving_bills-41817_by_pixabay.com_sm.pngConsider just a handful of the bills all ready being pushed through in 2017:

Bills RI H5057 and RI H5107:  Minimum Wage

The most common misconception of those who do not understand business and economics, is that the politically imposed minimum wage improves the earning power and lives of low lever workers.  This is not and was never the case.

It may appear to be cruel to state this, but it is no less true:  Human capital is no different than any other commodity in the marketplace.  Workers have a real value to an employer; their education, experience, and labor are assets to those who employ them, much like an excavator or computer is an asset as well.  Yet just like the value of the contribution offered by any of these assets, it does not change when the price goes up.  At some point, the value of any asset’s contribution is outweighed by its cost. For example, the value contributed by a computer over manual file keeping is far more employable at $500 than it is at $10,000.  At some point the cost outweighs the value of any entity’s contribution.  This is no less true for computers than it is people.

Anyone who studied economics or actually hired people to work for their company knows there is and will always be a minimum wage. 

Businesses will always look for the greatest value in human capital, which means employing the best and brightest at a price they can afford.  Establishing a business climate in Rhode Island that is conducive to people wanting to start a business in the Ocean State, creates a high and market-based minimum wage.  It is only when the economy is driven by politics that small businesses cannot compete and the barriers to entry into a market for new businesses are so high it is nearly impossible to do so.  When this occurs, workers have less leverage, less options, less bargaining power, and therefore cannot demand as much for their talents in the marketplace. 

A market-based minimum wage means unhappy workers can leave a job because there are opportunities to do so, whereas a politically-driven minimum wage stifles competition and forces workers into jobs they cannot escape.

Bill 5057 causes this dynamic to occur. As if Rhode Island hasn't chased enough businesses out of the state, businesses that must compete with the pricing of online retailers, RI State Representatives David Bennett, Ray Hull, Charlene Lima, Marcia Ranglin-Vassell, and Aaron Regunberg seek to further disadvantage RI's businesses and low skilled workers by forcing the cost of human capital to spike, which will be passed on in higher prices, making businesses less competitive.  There is no question that those businesses struggling to be profitable in RI today will need to either relocate or close their doors permanently due to this legislation.

Bill 5107 is a selective minimum wage that actually discriminates against and punishes a particular small business for being successful, and even worse it targets those businesses helping those with the greatest need.  Successful small businesses that work with people who have developmental disabilities, and which can also do this so well the can grow and expand to employ more than just a few people, are punished by the state for their success.  This bill will prevent quality care facilities from expanding and hiring more people in Rhode Island. 

shakedown-1340048_by_pixabay.com_sm.pngRI H5141:  Surtax on Successful Business Leaders

This bill is simply another means of punishing successful businesses for their success.  Most startup businesses fail, and the risks taken by those who invest their time and leadership can be a financial nightmare.  Yet people do this all the time.  Why?  Because the profit motive draws innovators and risk takers to take the chance.

Much of Rhode Island’s leadership wishes to take this motivation away through this Bill.  This Bill is not a surtax on corporations, it is a surtax on success.

The result of such actions is clear:  Rhode Island will even further alienate businesses and prevent innovators and entrepreneurs from starting their businesses in the Ocean State due to fear of excessive taxation to punish their potentially extraordinary success. 

H5413:  Healthy And Safe Families And Workplaces Act     

This one-size-fits-all, politically driven business model does not work, and this attempt to further impose politically driven operations on every business owner is wrong and short-sighted.  Some businesses require different demands on the time and effort of their employees. Much like the minimum wage, the way to improve employee conditions, benefits, and earning potential is by encouraging more and more businesses to come to Rhode Island and establish a presence so that employees have choices. This bill will simply drive away more businesses; creating conditions in which unhappy employees are stuck in a job with no other options to move and advance elsewhere.

Make no mistake, most politicians in Providence understand these facts of business and economics, but they value their jobs and power more than doing what is right for Rhode Island workers and business owners.  Few have the courage to stand up and state what is clear and true to an educated and experienced businessperson. 

The Gaspee Business Network is comprised of men and women with the courage to stand for the Rhode Island worker and entrepreneur, often a lone voice in the fight against the will of politicians and their cronies.  Please join us today.

Showing 3 reactions

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  • John Niewiecki
    commented 2017-08-30 16:19:53 -0400
    Gary, we hope you are wrong but fear you are right. Thank you for your thoughtful comment.
  • Gary Beachum
    commented 2017-08-30 15:51:21 -0400
    I’m sorry about it, but you will never change the business climate in RI. I opened a small business in East Greenwich in 2001. It was based on successful plans I’d used in Virginia, Alabama, and North Carolina. I was in competition with no other business in the state, but it seemed like state and local government laws and officials were determined to stop me. I hired a lawyer to find out if I needed to bribe someone. He said, “This state would run better if you could bribe someone to get things done. The problem here is that the government sees itself as being in competition with business. It’s schizophrenic, and there’s no cure for that except time and total ruin.” I left in 2003.
  • Mike C
    commented 2017-04-07 16:49:51 -0400
    awesome job John

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