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Michael Cianchette is a Navy reservist who served in Afghanistan. He is in-house counsel to a number of businesses in southern Maine and was a chief counsel to former Gov. Paul LePage.
Remember “Whose Line is it Anyway?” The improv comedy show where the rules are made up and the points don’t matter?
Life imitates art.
Like many states, California is in the midst of election season. One seat up for grabs was held by the late U.S. Sen. Dianne Feinstein. Sen. Laphonza Butler, appointed as an interim fill-in following Feinstein’s death, is not seeking the job. That means it is wide open.
Four of the leading candidates for the job — three Democrats, one Republican — faced off in a debate earlier this week. Congresswoman Barbara Lee is one of them, boasting major support from national progressives and current statewide officials in California.
For Rep. Lee, it seems as if economic rules are made up and dollars don’t matter. In the middle of the debate, she called for a $50 per hour national minimum wage.
When pressed afterwards, she held fast to her position. Lee based her policy proposal on a report claiming a person earning $104,000 annually in San Francisco would be considered “low income.”
She should’ve said it was just bad improv.
This week’s inflation report generated a lot of headlines. And if you want more inflation, setting a $50 per hour national minimum wage is a great way to get there.
Diving deeper into the data from the federal government, you can see that one of the major drivers was an increase in the cost of shelter. Over the past 12 months, those costs have increased 6 percent.
So let’s act out Lee’s $50 per hour proposal. Just focus on housing.
Pretend you are in Westbrook. We will skip Portland because of the economic effects that stem from rent control. Right now, the median rent is about $2,300 according to Zillow.
But that’s the median and we’re dealing with the minimum wage. That same site says the lowest priced units were around $1,200 per month.
The rule of thumb is that around 30 percent of your income should be spent on housing costs, including utilities. Let’s add $100 per month to our lowest priced units for those bringing us to $1,300 per month. If that is 30 percent of your income, you’d need to earn $4,333 a month.
Multiply by 12 months to get annual earnings, and you need to make $52,000 per year on a single income to affordably rent a lower-end apartment in Westbrook or a pair of $32,000 salaries. A young couple each making $42,000 can affordably pay the median rent in that city.
Now pretend we are in a world where the newly-elected Sen. Lee gets her San Francisco-inspired minimum wage proposal passed.
If a full time job earns $50 per hour, that means they are earning around $8,666 each month. Thirty percent of that equals $2,600. And if the median apartment is only $2,300, then Lee has solved our housing problems, right?
Well, there are still only so many apartments available. The price of that $1,200 apartment will jump up, as will the $2,300 units. Shelter inflation rates will skyrocket.
Prices are set by supply and demand. Maine has a housing shortage; our demand exceeds our supply. The number of dollars floating around doesn’t change that. Only more roofs will.
It is easy to compare a political debate to a comedy show; Lee’s proposal for a $50 minimum wage is the best joke yet. Because unlike “Whose Line,” the rules of our economy still matter.
