Thursday, November 09, 2006

Minimum Wage

The Wall Street Journal has an article this morning about what the agenda of the Democrat Congress may be, and it includes an increase in the minimum wage:
"Raising the minimum wage is one fight the Democrats are expected to win. That would be a victory for organized labor, which has pushed for an increase for years, but a defeat for the restaurant and retail industries and small-business owners, who argue it would hurt the economy by forcing them to hire fewer workers.

Mrs. Pelosi has promised to bring legislation to the floor within the first 24 hours of the new Congress to boost the minimum wage to $7.25 an hour from the current $5.15. The idea is popular with voters: Six states overwhelmingly passed ballot initiatives Tuesday to raise the minimum wage and tie future increases to inflation. Republicans may feel hard-pressed to oppose the move.

At a news conference yesterday, President Bush cited the minimum wage as 'an area where we can ... find common ground.'"
There is an old refrain in all of this that I want to mention.

Who is fighting for an increase in the minimum wage? Labor unions. Why? Because labor unions benefit from increases in the minimum wage.

Is anyone harmed by an increase in the minimum wage? Yes, some people who would otherwise be employed will lose their jobs. Businesses (in retail and small business) who employ workers that will be paid the increased minimum wage will see increased costs, so they will see decreased profit (a.k.a. income to the small business owners). Consumers will see increased prices.

What happens to the workers who will be unemployed? Well, perhaps some of those workers will become another statistic counted as those in our country who are below the poverty line. This means a scenario for the Democrat party that is almost a "have your cake and eat it to" story,since increasing the minimum wage can make it easier for the Democrat party to argue that something must be done about the growing number in poverty.

On the other hand, it seems that most of the workers harmed by an increase in the minimum wage will be teenagers who will not be able to find employment.

An increase in the minimum wage will change incentives in other ways as well. It will increase the incentive employers see to hire illegal workers, while at the same time increasing the incentive illegal workers see to risk illegally entering this country.

As you can tell, I do not support an increase in the minimum wage because I don't think any of the economic results are good for our system of political economy.

If you support an increase in the minimum wage (and apparently many do since many of the ballot measures passed in this election) perhaps you can convince me the results will be good, or that the results I think will occur simply will not occur.

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