Pretty much every economist outside of Obama’s circle knows minimum wage laws create unemployment, artificially raise prices, and, in general, are a horrible idea. I mean, if it makes sense to raise the minimum wage to $9, why not $25? Once you start to work up the answer to that question in your head, you see why it makes no sense to raise it to $9 . . . or to have a minimum wage at all.
Cafe Hayek, incidentally, is covering the issue thoroughly, with posts ranging from the hypocrisy of representatives who push for a rise in the minimum wage yet decline to pay their interns anything (on grounds that their work gives valuable job experience . . . whereas other employers’ work presumably doesn’t) to aggregations of links that blast the proposal for what it is: bad economics, political grandstanding, a slash at the poor and the middle class, and merely a bone for the unions (by increasing the minimum wage, union negotiators can push for higher wages for their workers–“Our wages are only $3 an hour over the minimum wage!”–which is the real reason the Democratic Party is pushing for this).
One of my favorite passages about the outlandish minimum wage proposal comes from the Grumpy Economist:
President Obama’s state of the Union Address was to me, an interesting peek into the Administration’s thinking, and a revealing piece of political rhetoric (I mean that in the good sense of “rhetoric,” i.e. “what arguments we use to persuade people”)
…today, a full-time worker making the minimum wage earns $14,500 a year. Even with the tax relief we’ve put in place, a family with two kids that earns the minimum wage still lives below the poverty line. That’s wrong….
Tonight, let’s declare that in the wealthiest nation on Earth, no one who works full-time should have to live in poverty, and raise the federal minimum wage to $9.00 an hour. This single step would raise the incomes of millions of working families. It could mean the difference between groceries or the food bank; rent or eviction; scraping by or finally getting ahead. For businesses across the country, it would mean customers with more money in their pockets….
What caught my eye is the “family with two kids,” “…millions of working families.” It paints a grim picture: mom, dad, two kids, trying to survive one wage earner’s full-time minimum-wage job.
My thought: What planet do the president’s advisers live on? Come take a look, say, at the south side of Chicago, where I grew up and live, and where President Obama spent many formative years as a community organizer and so knows it even better. Is the first-order problem of these neighborhoods that its residents live in intact families with two kids, one full-time wage earner, trying to live on the wages from a full-time minimum wage job, but having a tough time making ends meet? Is there anyone like this?
Something for Lent
“The saint with little has more to share that the rich man blessed with all he owns.”
Ivan Innerst, Saints for TodayBookmark it: del.icio.us | Reddit | Slashdot | Digg | Facebook | Technorati | Google | StumbleUpon | Window Live | Tailrank | Furl | Netscape | Yahoo | BlinkList