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?
For at least a century and a half, the left has used the exploited factory worker as the representative of all poor people. If something is good for the exploited factory worker, then it must be good for all poor people. Right? Since a wage hike would be good for exploited factory workers, it must be good for all poor, including the unemployed.
But the unemployed have their own perspective (unless they have been blinded by leftist propaganda). Raising the minimum wage doesn't help them one bit because it destroys jobs, so they have no reason to support it.
A lot more could be said about their perspective. For example, exploited factory workers hate profits because they see profits as money that has been stolen from them. But the unemployed have no reason to hate profits and may even like them if profits lead to lots of jobs being created.
Posted by: John Pepple | Sunday, March 02, 2014 at 08:38 PM
All very true, John. I'll add that raising the minimum wage a certain amount doesn't just raise the minimum wage, but all other wages. A $10 an hour employee sees a minimum wage co-worker suddenly deemed as valuable as he, which is unfair, and so requires an increase of at least the same amount. This raises all the costs of employment across all occupations and industries.
Posted by: J. Reed Anderson | Monday, March 03, 2014 at 11:27 AM