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Minimum Wage, Maximum Harm - Bad economics hurts low-income workers
Capitol Confidential ^ | 6/12/2012 | Jarrett Skorup

Posted on 06/13/2012 7:40:39 AM PDT by MichCapCon

If some legislators have their way, the state would gradually raise its minimum wage to $10 per hour and adjust it to inflation.

This would give Michigan the highest mandated minimum wage in the nation. It would also greatly harm the majority of workers and businesses in the state.

According to MLive, bill sponsor Sen. Bert Johnson, D-Highland Park, said, "My bill would shrink government spending and drive demand for products and services."

Some questions for Sen. Johnson and those who support the proposal:

If raising the minimum wage to $10 an hour is good for workers and would "drive demand" for other products, why not propose $100 per hour? Wouldn't this be even better and drive even more demand? Economist Thomas Sowell once wrote, "There are no solutions; only trade-offs." If raising the minimum wage is a "solution," what is the trade-off? As of last year, few of the offices of the Michigan congressional delegation offered a wage to their interns. Is it hypocritical to force businesses to pay what your colleagues refuse? The vast majority of economists agree that a higher minimum wage is an overall harm to the economy and workers — especially low-income and low-skill workers who are the first to lose their jobs when the minimum wage goes up.

Even the late moderate/liberal economist Paul Samuelson, when asked in 1970 about a proposal to raise the minimum wage from its existing level of $1.45 an hour to $2 an hour, responded, "What good does it do a black youth to know that an employer must pay him $2 an hour if the fact that he must be paid that amount is what keeps him from getting a job?"

Raising the minimum wage also disproportionally harms small businesses, which often are only marginally profitable and would have to spend a greater amount of time and money dealing with this new regulation. This is why large corporations like Wal-Mart have long advocated for a higher minimum wage — these companies already pay significantly higher than the federal minimum and are able to use government to limit their "mom and pop" competition.

My colleague Michael LaFaive summed this up best when he said, "The research says that the only true minimum wage is zero, which is what many people find themselves making as a direct result of being priced out of jobs as a result of government mandates."


TOPICS: Government
KEYWORDS: economics

1 posted on 06/13/2012 7:40:48 AM PDT by MichCapCon
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To: Springman; Sioux-san; 70th Division; JPG; PGalt; DuncanWaring
The free market will set a minimum wage on its own.

If anyone wants to be added to the Michigan Cap Con ping list, let me know.
2 posted on 06/13/2012 7:44:10 AM PDT by cripplecreek (What does it profit a man if he gains the whole world but loses his soul?)
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To: cripplecreek

—The free market will set a minimum wage on its own.—

My meme, ever since the OWS thing started, when arguing against the “capitalism has failed” claim is to say this. First, we were created with “free markets”, not capitalism. Second, we are no longer in “free markets” and that is why it is collapsing. Want proof? In a free market there is no such thing as a government mandated minimum wage.

We have not been in a free market for a LONG time. I finally opened my eyes about fifteen years ago when I dumped television.


3 posted on 06/13/2012 7:56:28 AM PDT by cuban leaf (Were doomed! Details at eleven.)
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To: cuban leaf

The free market system works because it allows winners and losers to pick themselves naturally. Its a completely unbiased and non racist system that doesn’t care a bit about race, religion, sex or anything outside money.

If we eliminate te minimum wage we won’t go back to 10 cents per hour, we’ll go to what the market will bear. A businessman who tries to cut his wages to 10 cents per hour won’t be in business for long since labor will go down the street to the guy who pays better.


4 posted on 06/13/2012 8:04:37 AM PDT by cripplecreek (What does it profit a man if he gains the whole world but loses his soul?)
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To: cripplecreek

Along those lines, I honestly think Jim Crow would have collapsed of its own weight if it had been left alone, and for the same reasons you mentioned.


5 posted on 06/13/2012 8:06:39 AM PDT by cuban leaf (Were doomed! Details at eleven.)
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To: MichCapCon

Minimum wage effectively renders functional poverty illegal.

You can live on less than $10/hour. Not easy, but the vast majority of people on the planet do (median is $2/day). However, you can’t live on less than $10/hour if you can’t get a job paying that.


6 posted on 06/13/2012 8:12:29 AM PDT by ctdonath2 ($1 meals: http://abuckaplate.blogspot.com)
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To: cripplecreek
There are many reasons why I dislike minimum wage legislation. But perhaps the biggest reason is that it sets up politicians as 'the provider'. A politician will, in effect, say, "your cheap boss won't pay you a fair wage. You need me to get the wage you deserve." In the end, the damn politician hasn't done a darn thing. He hasn't had to scrounge up funds to make payroll. The business has had to rework their budgets to remain profitable. They had to maybe raise prices, or let marginal employees go. And yet, the politician takes credit for the wage hike. Well, they don't get any credit from me.

Ultimately, the politician drives a wedge between a low wage employee and his employer which he uses for his political gain.

7 posted on 06/13/2012 8:13:09 AM PDT by fhayek
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To: cuban leaf

The same with slavery. Slaves were extremely expensive and getting more expensive all the time. Meanwhile more modern methods were being developed and becoming more cost effective.


8 posted on 06/13/2012 8:17:52 AM PDT by cripplecreek (What does it profit a man if he gains the whole world but loses his soul?)
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To: MichCapCon

“Oh most gracious politician, please raise the minimum wage.”

“OK, of course we’ll have to raise SS payments, food stamps, and every other government give away too.”

“That’s OK, just charge the rich their fair share...”


9 posted on 06/13/2012 8:21:23 AM PDT by mrsmith (Dumb sluts: Lifeblood of the Media, Backbone of the Democrat Party!)
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To: MichCapCon

Money is not value, money is a representation of value.

A gallon of gas is worth around 30 minutes of mundane labor. $3.50 represents the value of both.
Compel employers to pay $5 for 30 minutes of mundane labor, and a gallon of gas will soon cost $5 ... because a gallon of gas is still worth about 30 minutes of mundane labor.


10 posted on 06/13/2012 8:26:11 AM PDT by ctdonath2 ($1 meals: http://abuckaplate.blogspot.com)
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To: fhayek

Government has positioned themselves as both provider and protector of poor and rich alike. Unfortunately they cannot and should not do either.


11 posted on 06/13/2012 8:27:12 AM PDT by cripplecreek (What does it profit a man if he gains the whole world but loses his soul?)
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To: ctdonath2; MichCapCon
You can live on less than $10/hour.

Who you kidding? Every thing has doubled in cost in the past 7 years.

In fact, most people have had their 10. per hour jobs cut to part time, so the employers can avoid employee benefits...Employer no longer want full time workers. We all know why. Even at full time, after taxes, you come home with what, 1175 bucks a month? ...

Try raising a family, buying food, paying car insurance, buying gas, clothing, paying sky high rents and mortgages, repairs, this is not even to mention what about medical care costs???

You just try doing that on 10 stinking dollars an hour which is 6.50 an hour, in today's America, where it can cost 80 dollar just to fill a GD gas tank.

Some of the comments here like yours, are just over the top.

12 posted on 06/13/2012 8:28:17 AM PDT by dragnet2 (Diversion and evasion are tools of deceit)
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To: MichCapCon

In their defense I’m sure the Dems will drag out the old canard that “this is what Henry Ford believed in”.

Living in Michigan it was clear to me my neighbors had some of the most backwards and crosswired economic thinking I’d ever seen.


13 posted on 06/13/2012 8:34:29 AM PDT by Buckeye McFrog
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To: cripplecreek

Don’t believe in the minimum wage at all.

Heard the black dude who is on the Fox Sunday financial experts show on Sunday.

He was on Fox and Friends this morning talking about how income has decreased in the U.S. in the last few years.

The weird thing is that income has decreased among working people but INCREASED among non-workers.

Whoa. Anybody see anything wrong with this picture.

He also said our spending and saving habits have changed dramatically. Still spending on stuff we want but not saving much at all.

I don’t believe he’ll vote for Obama again (although he admitted he did the first time).

Sorry I can’t remember the guy’s name. Very smart.


14 posted on 06/13/2012 8:34:47 AM PDT by altura
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Comment #15 Removed by Moderator

Comment #16 Removed by Moderator

To: altura

Probably Charles Payne.

He did several shows with Glenn Beck on FOX that were directed at blacks with primarily black studio audiences. Even among those conservative blacks, better than 95% voted for Obama. lots of them said that they felt that they had to vote for him.

Like salmon swimming upstream. Bet they didn’t expect the grizzly that was waiting for them.


17 posted on 06/13/2012 8:43:36 AM PDT by cripplecreek (What does it profit a man if he gains the whole world but loses his soul?)
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To: MichCapCon

I hate this socialist nonsense, telling some people what to do so some will get a bit more money (for nothing).

But what really frustrates me is that no-one ties this minimum-wage stuff in with ILLEGAL ALIENS/”undocumented workers”.

If we get rid of minimum wage, we’ll reduce (small) companies desparately taking in illegals to keep their business afloat.

Minimum wage, I’m convinced, directly drives the businesses illegally hiring aliens under the table.


18 posted on 06/13/2012 8:48:38 AM PDT by the OlLine Rebel (Common sense is an uncommon virtue./Technological progress cannot be legislated.)
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To: Tzar; ctdonath2; MichCapCon
You bet, trying living on *less* than 10 bucks an hour, which after taxes comes to about 6 or 7 bucks an hour.

You're going to have a family and do that? No freaking way.

BTW, if ya live at mom and dads, or somehow live rent free, and pay no taxes, ya you can get by on LESS than 10 bucks an hour, which after taxes comes to about 6 bucks an hour.

Some of these are comments here I'd expect from some government employee on a fat retirement pension, with full coverage medical benefits.

We've come a long way America.

19 posted on 06/13/2012 8:51:17 AM PDT by dragnet2 (Diversion and evasion are tools of deceit)
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Comment #20 Removed by Moderator

To: Tzar
I think we are moving toward multigenerational homes. If the grandparents, parents, and adult children live together, they can pool resources like many do in the 3rd world

Absolutely!!

21 posted on 06/13/2012 9:18:02 AM PDT by dragnet2 (Diversion and evasion are tools of deceit)
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To: cripplecreek

It’s an emotional connection with blacks that they find it hard to get over.

Even though Obama is not black at all in the sense that they are, they feel that he is one of them.

I hope this will change someday.


22 posted on 06/13/2012 12:16:19 PM PDT by altura
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