Washington Post columnist Catherine Rampell just stumbled into a truth. Raising minimum wages could be disastrous. Depending on the rate.
While “Bernie Sanders, Martin O’Malley and a host of other well-intentioned liberals want to hike the federal minimum wage to $15 an hour,” she calls the proposal “badly misguided.”
And yet she says that the current federal wage floor, at “just $7.25 an hour . . . is absurdly low.”
Why, this Friday, she notes, marks six years since the last minimum wage hike!
Rampell recognizes that raising the minimum wage to $50/hour would cause unemployment, massively. She also realizes that, in many low-wage states, the mere $15 rate would do the same. But raising “the federal minimum wage to $10.10”? Might work! “This is a trade-off . . .”
Yes. Stop right there. Trade-offs, indeed.
She wants us to think about getting the rates right.
Employers and job-seekers do that already, in the marketplace. If businesses don’t pay enough, the workers will move on to employers who will. Force businesses to hire workers for more than their productivity? Unemployment results.
A minimum wage rate helps some and hurts others. Rampell admits that, appearing to “accept” 500,000 people losing their jobs as collateral damage to boost wages for others.
Her proposed fine-tuning of rates supposes that politicians have greater knowledge about the “proper” price of labor than employers and job-seekers. Moreover, she ignores the inevitable political game, whereby politicians take credit for rewarding some, while hiding the costs imposed on others.
Finding the “right minimum wage” rate is mainly about hiding the victims . . . so voters won’t notice.
This is Common Sense. I’m Paul Jacob.
5 replies on “Fifteen or Fifty or Zero?”
Is Rampell arguing that we should be raising the federal minimum wage in order to adjust for inflation, and keep the harmful dislocations caused by the market manipulation a relative constant?
Scrap the whole concept is the correct answer.
The arguments for a $15 an hour minimum wage are just as valid for $50 an hour or $100 an hour.
And just as invalid.
GREAT column, Paul. Best discussion I’ve yet seen of the minimum wage law.
A couple decades ago, a young friend said raising the minimum wage to $10.00 per hour was a good idea. Using the time honored method of reductio ad absurdum, I asked if $15.00 would be good. She said that would be better still.
I kept raising the figure, finally reaching $500 per hour. She looked at me as though I was retarded. “That would be great! What’s your point?”
Many businesses are already forced to pay more than they can afford, thanks to the Affordable Care Act. Add to that the FICA tax. That so many people think the minimum wage should be enough to support a family shows their lack of understanding of basic economics.
However, sometimes I think I’d like to see college professors (and most federal workers) work forty hours per week on minimum wage and schools only charge as much tuition as can be paid out of pocket by someone earning a minimum wage.