Many liberals we know get behind the "rah rah rah" for a higher minimum wage. Sounds good, right? Everyone should enjoy a "living wage" (whatever that means) - and of course it appears more appealing to have people with modest incomes have more dough in their pockets.
But "sounding good" cannot replace reality. Economist Don Boudreaux explains the folly in such thinking.
Pres. Obama insists that raising the hourly U.S. national minimum wage by 39.3 percent – from its current $7.25 to $10.10 by July 2016 – will have (as described by two members of Mr. Obama’s Council of Economic Advisors, Jason Furman and Betsey Stevenson) “little or no negative effect on employment.” Furman and Stevenson and the Administration dispute the Congressional Budget Office’s findings that this proposed hike in the minimum wage will put hundreds of thousands of low-skilled workers out of jobs. So here’s a challenge that I (and others) have posed before but believe to be sufficiently penetrating to pose again. This challenge, of course, is posed to supporters of this hike in the minimum wage: Name some other goods or services for which a government-mandated price hike of 39.3 percent will not cause fewer units of those goods and services to be purchased. Indeed, name even just one such good or service.
Beer? Broccoli? Bulldozers? Coffee? Haircuts? Natural gas? Automobiles? Housing? Preventive health-care? Lawn-care service? Tickets to the movies? Smart phones? Subscriptions to the New York Times? Books by Paul Krugman? Professors of sociology? Assistant professors of economics? Any of these products work for you? If none of these work, surely you can name at least one other for which a 25-percent price hike will not cause fewer units of that product to be purchased. Or does low-skilled labor just happen to be the one good or service in the entire world for which a government-mandated 25-percent rise in the price that its buyers must pay for it will not diminish buyers’ willingness to buy it?