I can confirm that Greenspan said that he thought the minimum wage should be abolished - I was listening to his testimony on C-Span radio. When I heard this, I realized that he remains at heart a libertarian. His argument - which I agree with - is that the vast majority of workers who are paid minimum wage in the US are teenagers who are just starting out in the job market, who are being taught usable skills so that they can move up to higher paying jobs. Even though the labor market was very tight in the US last year and the year before, many unskilled teenagers were unable to get jobs, so were not learning the usable skills they need. Every year they delay entering the job market reduces their lifetime earnings, because they will always earn less money than the cadre of age cohorts who entered the job market earlier than they did.
The gap between the haves and the have-nots widens.
Another problem with the minimum wage is that it is a one-size-fits all rate. Here in the DC metro area, entry level jobs pay at least $7 an hour, so it doesn't really make any difference what the minimum wage rate is. In a community with a lower pay rate, it does shut some kids out of jobs.
A couple of months ago there was a knock-down-drag-out fight on the CFZ about minimum wage. Apparently some adults who are family breadwinners are paid minimum wage, so the emotional strings on the violins get played - how can we be so hard-hearted as to force these people who work full time to remain in poverty for their entire lives? Forget the fact that a skilled employee earns more than minimum wage - who cares about facts? Emotion is what matters.
The argument about unemployed teenagers is played on the emotional strings, as well. Greenspan was focusing on effect because he is dealing with result-oriented people, not people with principles. The Congress has to please the constituents to get re-elected.
In the context of a slow-down, abolishing minimum wage could do a lot - cutting labor costs may mean the difference between survival and bankruptcy.
The real question is, what business is it of the government to tell employers what they should pay their employees?
I realize that for Euro-socialists, this question is meaningless. |
