Quick Hits: Slots, Minimum Wage

Not on my watch, said Governor John Baldacci yesterday as he vetoed legislation to allow slot machines on Indian Island, the Penobscot reservation near Old Town. Baldacci insists that gambling is too important an issue for mere legislators to decide. In his view, a new gambling venue should be created only through a ballot initiative passed in a statewide election, such as the 2003 referendum that allowed the Hollywood Slots racino in Bangor. The message to Native Americans: get your own referendum. Any exception to the referendum process, in the Governor's words, "sends Maine down a perilous path, fraught with risk of unfair, arbitrary treatment among future gaming proposals."

His logic escapes me. The slippery slope was created when Maine first introduced a lottery in 1974. That was when Maine voters decided that gambling was OK. All regulation since then has been "unfair" and "arbitrary." I may be running against her, but I agree with Representative Sheryl Briggs of Mexico when she sees discrimination against the Penobscots. "What gives us the right to tell them no?" she asks.

The "path" that we are on right now leads us to annual referenda on specific gambling proposals. Last year it was a casino in Washington County; this year it's one in Oxford County. Let's stop cluttering our ballots ad eternam and settle the question once and for all. Either gambling is allowed anywhere in Maine, subject to local approval, or it is allowed nowhere in Maine, in which case we dispense with the Maine State Lottery. It is a matter of fairness and consistency.

Raising the minimum wage gets votes, but is it the right thing to do? The State Legislature on Friday gave initial approval to a plan to raise Maine's minimum wage from $7 an hour to $7.50. Setting a minimum wage is a form of price control (in this case the price of labor), and government has never been good at price controls. Artificial prices interfere with free-market pricing and are ultimately self-defeating. Wages propped up by fiat eventually lead to fewer jobs.

According to U.S. Census data, over 98% of employees whose wages would be increased by this proposal live with working parents or relatives, live alone, or have a working spouse. Less than 2% are sole earners in families with children, and each of these sole earners has access to supplemental income through the federal and state earned income tax credit (EITC). Economists generally agree that the EITC is a better way to target resources at poor families than boosting the minimum wage.

Politicians jumping on the minimum-wage bandwagon will argue that rising wages are needed to counteract inflation in the costs of food, energy, and housing. But will they lower the minimum wage when deflation sets in (as I believe will happen in the coming depression)? Not likely. Ultimately, the ones best able to determine the fair price of labor are employers and employees freely negotiating between themselves.