And Still More On The Minimum Wage
Can You Tell I Am Slightly Obsessed Regarding This Topic?
By Pejman Yousefzadeh Posted in Economy | Featured Stories — Comments (9) / Email this page » / Leave a comment »
I think that this post hits the nail on the head on the issue of the minimum wage and the politics behind it (read on):
Let's assume that everyone who supports an increase in the minimum wage also knows - and perhaps even agrees with - the fundamental economic insight that such an increase would lead to either lower-skilled workers being laid off or prices for goods going up or both. It's conceivable that someone could still support a minimum wage increase after being convinced of that. It's a price worth paying, they might say. Or they could argue, as some supporters of the current proposal do, that an increase to $7.25 - phased in over three years, no less! - won't do that much damage. After all, it's not a $15 increase.
Now let's try a little thought experiment. Assume support for a minimum wage increase is conditional and dependent upon the proposal offered. A call for a $20 minimum wage, for instance, would arguably be greeted with much less enthusiasm. Evidence of this is the fact that even supporters of the minimum wage aren't willing to go so far as to propose such a thing.
[. . .]
But the cost of living differs dramatically in different parts of the country, too: $7.25 doesn't buy the same amount of stuff in Manhattan as in Kansas City. And there's the rub. It's easy for a congressman from Manhattan to support a $7.25 minimum wage since it might have only imperceptible economic effects in his district. In Kansas City, however, the effects would be relatively greater.
Now consider what might happen if Congress were required to adjust the federal minimum wage by the cost of living in each congressional district. In areas where the cost-of-living is close to the national average, the minimum wage would be around $7.25. In Manhattan - where it costs twice as much to live when compared to other areas, like Kansas City - the minimum wage would be at least $14.
This would set off all sorts of protests from congressmen in districts in which the upward adjustment is greatest. Now the businesses in their districts would feel a pinch they wouldn't feel under a non-adjusted minimum wage. Those formerly enthusiastic congressmen might even start to question why it's the federal government's business to meddle in the often complex process - going on all around the country within hundreds of companies and cities, each of which are faced with vastly different economic situations - by which an employer and employee come to their own agreement on compensation for employment. And isn't that the sort of debate we should be having?
Brilliantly put. This post makes me glad we have a Blogosphere.
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And Still More On The Minimum Wage 9 Comments (0 topical, 9 editorial, 0 hidden) Post a comment »
In a perfect world, there would be no minimum wage. But I think John Stossl, in an argument against the minimum wage hike over at Townhall, actually made the opposite point. Most states already have a higher minimum wage than at the federal level, and only 2% of the population is currently drawing minimum wage anyway. A boost to $7 whatever and hour is going to have almost no impact on the economy and its a political winner.
There will be an impact. The most obvious will be higher costs for those businesses that DO employ the low end of the wage scale. They will either need to cut expenses (either cut employee's hours or cut employees) or raise prices or a combination of the 2.
Unfortunately this has the effect of hurting the very people the minimum wage increase is supposed to help. They are going to loose work (or reduced hours = smaller check) and they are going to have to pay higher prices. I can afford to pay an extra quarter for a big mac or a few extra $$ for gas per week. But those workers who are at the bottom of the pay scale can't.
This may be a political win, but it is no moral victory.
Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.
It's a political nothing... it has to be one of the most overrated issues out there. How many people decided their vote in 2004 based on the minimum wage? How about in 2000? How about in 2002? 2006? It is a non-factor. Caving to the Democrats an an issue as unimportant as this is just foolishness. It's important that we cave because the Democrats and their buddies in the MSM tell us it's important.
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman
The minimum wage in Kansas is $2.65. The State law excludes from coverage any employment that is subject to the Federal Fair Labor Standards Act. Almost ALL of the waiters/waitresses, bus boys, anything food service where tips are involved get $2.65. I beleive we are the ONLY state in the union with wages lower than $4.00.
http://www.dol.gov/esa/minwage/america.htm#Kansas
As a side note, I beleive the minimum wage hike is a good thing. Most economists say it will mostly effect teenagers since they have the majority of minimum wage jobs. If teenagers get more money how will this help our economy? Teenagers will buy more Ipods, TV's, computers, mobile phones, etc...Of the teenagers I know, they spend money the second they get it. Hence spuring a technology growth. Also, if they are the type to save money, they'll have more money for college.
Teenagers will buy more Ipods, TV's, computers, mobile phones, etc...Of the teenagers I know, they spend money the second they get it. Hence spuring a technology growth. Also, if they are the type to save money, they'll have more money for college.
Consumer spending, particularly on low cost items is a very poor way to stimulate the economy. Letting the investor class keep and invest more money has a much larger multiplying effect. It is called velocity in Economics textbooks.
"Nothing works like freedom, Nothing succeeds like liberty"
Kyle
Those of us in flyover country are paying the price for the Yankees' (and left coasters') socialist local governments. Just because their areas are so expensive (mostly due to stupid laws and nanny state behavior) the rest of us have to endure higher unemployment than we would otherwise have just to keep their businesses competitive.
They may think we are stupid, but I think they are crummy turds.
I meant what I said and I said what I meant. An elephant's faithful 100 percent.
That the vast majority of the people believed, despite all scientific evidence that the drug Laetrile cured cancer.
Then suppose that the Democrats came up with a bill to use government dollars to give Laetrile to everyone with cancer, they even had a talking point about how this would save money because then all those sick people would be healed. They would go on and on about the heartless Republicans who wanted Grandpa and little Jenny to die of cancer.
This is the situation we face, sure we know that the minimum wage is snake oil, it does no good and some harm. But, nearly three quarters of the American People do not understand, or refuse to believe the truth. So, there we are. People are going to only rise to the level of their understanding, and ignorant people will always be fleeced by demagogues.
"Nothing works like freedom, Nothing succeeds like liberty"
Kyle