Tag: minimum wage

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free trade & free markets too much government

The Zero Effect

The idea of hiking the legal minimum wage just doesn’t go away, alas.

The usual thought experiment those with common sense use to elicit a modicum of sagacity in the minimum wage advocates’ addled synapses runs like this: You say you want a higher minimum wage, say $9 per hour. Why not $49 — or $490.00?

Every sensible person knows that wouldn’t work; you can’t simply force all wages up without dire consequences in lost jobs, businesses. But it’s a way to impart some sense of why prices are what they are, how supply and demand work.

But there’s another tactic: Make the counter-​offer. “I want to help low-​skilled workers find jobs. Set the minimum wage to $0!” Then ask:

Would people work for zero dollars?

Would all wages fall to nothing?

You’ll get a few absurd answers, but the logic should sink in, eventually: High-​wage jobs are there not due to Santa Claus employers, but because of worker productivity.

With no minimum wage, there would be more low-​wage jobs available, sure. And some of the jobs at the current minimum may indeed go down in pay, but there would be a lot more employment.

And no 5¢ an hour jobs for the same reason no one but interns today work for zero dollars. It wouldn’t be worth it, wouldn’t even cover the costs of getting to work. Folks do have other options: Keep looking; sponge off relatives; beg, borrow, steal; scrounge. Sell things on eBay.

That’s why now people reject some jobs.

Let others protest low wages. The rest of us should protest low productivity.

And a lack of common sense.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets too much government

Protesting Gravity

The continuing, ramped-​up protests of low wages at low-​end service jobs, like McDonalds and (to some extent) Walmart, put many of us in a bind. On the one hand, a decent person wants others to be happy in their work, and paid well. On the other, a wise person wants those others to face reality.

It does no good to protest the law of gravity, or blame nature for your limited skill set. We work with what we have, apply our intelligence and industry from our baseline situations. We adapt.

How?

Produce more of what someone else is willing to pay for. That’s how (some) other people earn more than $7.50 an hour. Or $17.50 an hour. Or $175.00 an hour. McDonalds doesn’t pay high wages. But there are many companies that do. Even in the restaurant biz there are better-​paid burger-​flippers — those burgers are priced higher (and taste better, and are served in posher places) thus allowing the purveyors of said hamburgers to afford the higher wages.

What do protestors really expect? If their wages go up, either their employers fire some workers and switch to automation (thus cutting costs) or up go the prices.

But if prices rise, who buys the burgers that pay for McDonalds’ workers’ wages? I’ll buy a McDonalds burger for a buck, or a premium burger for five bucks. But jack up the prices, and I go elsewhere.

Protesting low wages? Might as well protest gravity.

Or, since the economy’s in such a slump that folks would rather gripe than look for more productive jobs — which are, after all, unnaturally scarce — protest Obama.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets

Pot, Kettle; Walmart, The Nation

Writing about Walmart is like reading The Nation: neither is as much fun as shopping at Walmart.

At Walmart I get good deals. In The Nation I get skewed analysis. Just look at the old progressive rag’s online “petition” to Walmart:

While Walmart rakes in annual profits of more than one billion dollars, the average hourly wage of a Walmart sales associate … is just $8.81. That translates to an annual salary … far below the federal poverty level for a family of four.

On top of being unjust, Walmart’s low wages come at a high price for American taxpayers: a recent report revealed that, because the retail giant’s employees are forced to utilize government benefits to supplement their meager income, a single Walmart Supercenter could cost taxpayers from $900,000 to $1.7 million per year.

Typical: there’s so much left out.

What would Walmart workers’ wages be if Walmart hadn’t employed them? More? Not plausible. Walmart’s mom-​and-​pop competition typically pay lower wages.

Net effect: Walmart lifts workers out of poverty.

Whose responsibility is it to feed “a family of four”? The employer of one family member? No. The parents in the family, who might be morally compelled to develop more lucrative skills or a plan for abstinence. (Of course, many Walmart workers are single, or have spouses or parents who work as well.)

Recently, a Walmart bigwig got a bit testy and sent out an email noting that The Nation has been paying its interns a monthly stipend of $150 per week, far below the minimum wage.

Normally I’d defend The Nation’s (and the nation’s) internship policies. But for now let’s just chuckle.

This is Common Sense. I’m Paul Jacob.

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links

Townhall: Barack Obama and the Teachable Wage

This weekend’s Townhall contribution from Yours Truly expands on a point made here on Friday: Raising the minimum wage does not help the poor … so why not press the point?

For your further consideration, including extensive work on the racial effects and racist origins of minimum wage laws:

There is of course a long history and bibliography on the economics of price floors like the minimum wage.

Categories
free trade & free markets video

Video: How Minimum Wage Laws Cause Unemployment

Thanks to the president, it’s the meme of the moment. Take it up a notch. With an understanding of the economics involved.

Categories
free trade & free markets national politics & policies too much government

A Teachable Wage

The U.S. President wants to up the national minimum wage to $9 per hour.

Republicans tend to lose at such policy debates, sometimes by daring to tell the truth: That minimum wage laws tend to raise unemployment. But that doesn’t impress politicians, who can’t be bothered to look beyond the surface of such issues.

They present the minimum wage hike as a guarantee that higher wages get paid all around, that wages only go up, rather than what actually happens: some wages go up to meet the law, and others evaporate, as people are let go, jobs downsized, and new jobs go uncreated.

So why would congressional Republicans use the same old rhetoric to balk at the president’s plan?

Sometimes irony works. Republicans should take all the Democrats’ premises — we want higher wages, more wealth, etc., etc. — and up the ante:

“Yes, raising wages would be great! But why are you all such tightwads? Raise the minimum to $49 an hour! Or make the lowest rate comparable with congressional pay: $85 per hour!”

Then compromise and say they will only vote for the raise if the rate hike is a serious amount, not the president’s paltry $1.75 increase.

At that point, a more honest conversation will start up.

For the ugly truth is that the harmful effects of the current and rather low minimum wage laws rest mainly on folks who aren’t very likely to vote, or to notice why it is they are unemployed. But raise the rate to $49 per hour, or even $19, and the scam becomes obvious to all but the most dense.

Even Democrats would insist on a lower rate.

And then Republicans should demand that Democrats explain why. And reveal the perverse logic behind minimum wages for all to see.

This is Common Sense. I’m Paul Jacob.