Minimum Questions

Are you someone who believes that raising the minimum wage will reduce poverty and is good for workers?  If so - then please read this.

 

 

Dear Mr. Obama:

In this year’s State of the Union Show you called for the hourly minimum-wage to be raised from $7.25 to $9.00.  That’s an increase of more than 24 percent.  Because you trumpet this proposal as one to assist low-paid workers, you, presumably, deny that such a hike in the cost of hiring low-paid workers will prompt employers to hire fewer such workers.

In last year’s State of the Union Show you bragged of your administration’s increase in the tariff rate on Chinese-made automobile tires.  This tariff increase, which averages 30 percent over three years, is explicitly designed to dissuade Americans from buying Chinese-made tires – an effect that you recognize and applaud.

Question: If a government policy that artificially raises the price of Chinese-made tires reduces the quantities of such tires that are bought, why does a government policy that artificially raises the price of low-skilled labor not reduce the quantities of such labor that are hired?

I’m told that you’re a man of science.  I await your response.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030

Comments

[J. Reed Anderson]

Never mentioned, Peg, by journalists or even economists, is an hourly wage is more than just the wage. Never does anyone add to the dollar amount the employer's cost of FICA, Workers' Comp Insurance, SUTA, FUTA, and the cost of compliance. Nor does anyone mention that the hourly wage, plus all of the taxes, is paid before the employer pays himself.

[Peg]

J. Reed - all so very true.

My husband used to have his own business. Many don't understand the risk and burden of being the owner. One year, competition came in and undercut prices severely to gain market share. His income went down about 80%!! Too many on salaries have no clue what all is involved.....