The Artificial El Paso Economic Scam

art-wage1If you were not watching the city council meeting on Tuesday, you likely missed the discussion about “Lift Up El Paso” and a landscaping maintenance contract that was awarded on Tuesday. (This is the item where the verbal altercation occurred) As many of you know I have been writing about the impending economic doom of El Paso because of the unrestrained spending spree that the public policy agenda has embarked upon. During the discussion, over the award of the grounds maintenance contract (11.1), I noticed how the city intends to create an artificial economic boom for El Paso by artificially inflating wages.

The problem is that this artificial wage increase recycles money and does nothing to solve the underlining problem for the El Paso economy – the need to bring in new money. Let me explain.

First, let me bring you up to speed on the discussion that was had on Tuesday.

While awarding the grounds maintenance contract, the discussion between city staff, city representatives and bidders included the discussion about wanting the wages to be at a minimum of $10 an hour. According to the discussion, the city’s lowest hourly wage is $9.86 and the city representatives, that opined, stated that they want the workers on city contracts to be paid a minimum of $10 an hour. Lily Limon and the mayor mentioned a movement, or project called “Lift Up El Paso,” that was pushing for wages above the federal minimum.

The discussion included arguments about “best value service” versus “lowest bidder” and how the lowest bidder is basically, “you get what you pay for” type of service. The San Jacinto project was mentioned as an example and I’ll have more about that issue on Monday’s edition. For this post, the basic argument is that the city is not properly served when awarding bids to the lowest bidder. Instead, the city should award contracts to those bidders that offer better wages and benefits.

The discussion also included a local contractor asking for a larger portion of the work because he was based in El Paso instead of the other one who is based in Arizona. The award was awarded to two companies with a smaller portion going to the local company. For the purposes of this commentary, let’s focus on the issue of “Lift Up El Paso,” although the issue on local versus providers outside of El Paso is also an important discussion to be had.

As you might remember, back in August of last year, a coalition of activists including labor and religious groups formed the Lift Up El Paso Alliance to look into wage theft. They wanted the city to create a database of individuals stealing wages from their employees so that they would not get any more government work.

Somewhere after that, a minimum wage was included in the advocacy. At this point, I am not sure who inserted or if it has become an official policy of the alliance. It does not matter because from the discussion at city council it is apparent to me that an artificial wage is the latest scam to building up El Paso.

I realize many of you advocate for higher wages but, unfortunately, a forced higher wage does not address the fundamental problem with El Paso’s economy. So let’s focus on that for this discussion.

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By awarding service contracts to companies based on an artificial wage, the result is that it only recycles existing taxpayer money and sometimes, like in this case, takes the taxpayer monies and sends it out of town. Even if the provider is based in El Paso, the higher wages are only recycled through the economy flowing from the city, to the wage earner, back to the taxpayer and back up to the city. The wage earner is also the taxpayer.

This is not increasing the taxpayer pool but rather recycling existing monies through the economy.

On the surface it seems like the economy is increasing by the artificial wage hikes but in reality it is only increasing the cost to the taxpayer. As you increase the wage, the cost goes directly back to the taxpayer.

This is especially true because in El Paso the largest wage payer is the government sector.

The fundamental problem with El Paso is that there is no new money coming into the city. Either the same money is recycled, or worse, it is sent out of town. The landscaping contract that was awarded is the perfect example of this.

Although the company is guaranteeing above minimum wages it is only using money that is already in the El Paso economy, however, in this case it is even worse because a portion of the money, the profit, is sent out to Tempe Arizona. The Arizona company is not bidding for the service contract out of the kindness of its heart; they are looking to create profits.

The economy that is benefiting from the artificially inflated wages is Tempe Arizona.

The lack of not bringing in new monies into the El Paso economy is the fundamental problem with El Paso, not the low wages that city council wasted so much time discussing.

Before anyone starts to bellyache about tourism and the feel-good quality of life projects to attract new businesses, stop for a moment, catch your breath and look at the perfect example I just shared with you. An example that is based on what city hall did this week.

City council spent a considerable amount of time opining about demanding that companies that get city contracts pay above average wages. The real winner in that whole debacle is the taxpayers of Tempe Arizona who get new money from the taxpayers of El Paso.

Let that sink in for a moment.

Yes, I know, some of you are going to argue but El Paso has nothing to sell to other communities.

That is the biggest misconception around that it is so dumb that I am still flabbergasted that many of the city’s taxpayers don’t seem to get it. El Paso has much to export to other cities. Forget the old and tired argument about educational attainment levels and that El Paso wants to be like other cities.

El Paso has a workforce ready and willing to work. There are many economic sectors that would benefit from a workforce willing to do menial and labor intensive jobs if only they would be willing to do it, at the prevailing wages that makes it profitable to the companies. I have yelled this at the top of my lungs since the late 90’s and I will repeat it once again; El Paso sits on the epicenter of the largest free trade market in the world and it completely ignores it.

Mexico is the second and soon to be largest automotive manufacturer in the world and almost every kitchen appliance sold in the United States comes from Mexico. El Paso sits square in the middle between the largest manufacturer in the world and the largest intellectual property creator (technology) in the world. All of that just flies over El Paso.

The reason for this is because El Paso’s leadership is so busy trying to be like other cities that it completely misses being El Paso.

Thus, El Paso just recycles money, and sometimes sends it out instead of bringing in new money.

Those that argue that El Paso shouldn’t be selling itself out as a low wage center should also advocate what they preach by not spending money at Walmart or the Dollar stores in town. Stop celebrating outlet stores and start spending your money at store like Albertsons who cost more but offer better services. The reason Walmarts and Dollar Stores prevail is that everyone wants to spend as little as possible on what they consume. A business owner pays wages based on what they are able to sell their product at. If their customer demands lower prices than the business owner pays a lower wage to stay in business.

Lead by example, if you expect higher wages then stop making Walmart the most successful grocery store across the country.

As for El Paso, you have the ability to dig yourselves out of economic failure by simply embracing what you are; El Paso. El Paso is not Santa Fe, Austin or whatever the city du jour is. El Paso is El Paso and low wages are the ticket to economic prosperity. Embrace it and watch your success grow.

The Tempe Arizona company owner stood proudly before city hall and proclaimed my company is the best landscapers and toilet cleaners. He proudly added that he had been doing it for many years. He did not pretend to by anything other than a menial labor provider, and guess what? The Tempe Arizona taxpayers are getting your tax dollars.

2 thoughts on “The Artificial El Paso Economic Scam

  1. a workforce willing to do menial and labor intensive jobs…
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    Except you can’t build a future on that premise. It was tried in the 1970s with the garment industry and all we got was dumb workers who had little incentive to improve their lot and now thousands of them languish on welfare and in HACEP. If El Paso were adjacent to China or Viet Nam or India, those workers’ kids would be graduating from Stanford and starting genetics companies. As it is, they cheer for the Little Dogs and work at a call center, if they work at all. Not everyone is able to succeed in life and Mexico is the poster child for that sad fact.

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