Fox News’s Bill O’Reilly and 2012 Republican presidential candidate Mitt Romney agree with America’s progressives: raising the minimum wage is common sense.
The Swiss had a chance to prove their solidarity with that notion yesterday, when they voted on whether to establish a minimum wage in the country, a rather high one of 4000 francs per month (something close to 22 francs per hour). They voted the proposal down.
Overwhelmingly. By over 76 percent.
Unlike in America, this minimum wage would have affected a huge hunk of the population. One out of ten Swiss workers earns less than the proposed minimum. In America, only about a single percentage of workers earns close to the national minimum.
This matters, as Frédéric Bastiat clearly explained, because price regulations can have two effects: a loss of production, or none at all — “either hurtful or superfluous.” No effect, when the price floor (as in a minimum wage) is set lower than the level most prices are already at (or, for which workers already work). But when the price floor gets set higher, goods go off the market — with too-high wage minimums, workers with low productivity cease to get hired.
Swiss voters could scarcely afford to risk the jobs of ten percent of the workforce.
In America, raising the minimum wage is usually a matter of sacrificing a few people (whom voters mostly don’t know — Bastiat’s “unseen”) while rejoicing in the higher wages of those workers retained (the “seen”).
In Switzerland, the government declared the down vote a victory for common sense.
Which it was.
This is Common Sense. I’m Paul Jacob.