How to give people raises

For months, President Obama and Majority Leader Reid have insisted that raising the minimum wage is the way to give hard-working Americans a raise. Unlike the president or members of Congress who have never run a business, I actually have given workers raises. It’s a pleasure to reward an employee’s hard work. But it isn’t something that happens by whim or the stroke of a pen. A worker’s wage relies on many factors, many of them things that presidents and lawmakers cannot foresee or predict.

For example, there are the wages offered by the Walmart in Williston, N.D. Economist Mark J. Perry wrote at AEI.org about the wages on offer there: $17.40 an hour for cashiers, or $19.90 an hour for lube shop staff.

Walmart is offering 2.5 times more than the federal minimum wage. How can this happen?

North Dakota happens to sit atop the Bakken Shale oil field. The Bakken field now produces over 1 million barrels of oil a day. As recently as six years ago, the Bakken produced less than 200,000 barrels per day. Its population has ballooned while its unemployment has fallen to 0.9%. With Bakken’s help, the United States now produces 8.43 million barrels per day, the highest level in 27 years.

That incredible growth occurred mostly on private land through risk-taking, entrepreneurial activity. In addition to lower energy prices, job growth in related sectors has been incredibly strong. Richard Rahn writes in the Washington Times:

“Unconventional oil and gas producers, including suppliers of equipment and materials, and energy-related chemical production already support about 2.5 million new jobs, which is equal to about 1.8 percent of the work force. By 2025, an estimated additional 3.9 million jobs will have been created. On average, these new jobs pay more than jobs in other industries.”

The president visited North Dakota last week, giving a speech about 300 miles away from Williston. It’s a shame he didn’t visit and observe how to legitimately raise wages the honest and sustainable way, through economic growth.