Re: Minimum wage
I can't agree with you on this either, Dipy.
The problem isn't that low wage earners will suddenly have more money than they know what to do with. The problem is that the wage increases ripple right on up the line. If the min wage folks get, say, a 10% increase of $0.50/ hour, their bosses will also get 10% (or more) of $0.75/hr. THEIR bosses will get 10% (or more) of $500/month. And so on. This is just to keep the wage separation in line.
In small businesses or in highly competitive, labor intensive businesses, that increase can make a big difference in the profitability of the company or in the number of people employed.
Now, your argument is that the min wage was raised, and it didn't hurt the economy. And, while we were in a boom, you were absolutely right. While we were in a boom, and while labor costs were relatively static, and while productivity was climbing, and while there was no excess capacity, you were right. Now, however, the dynamic is shifting, and now is the time that those increases will be felt. If we do actually enter a recession, those wage increases will exacerbate the severity of the decline, and will make recovery that much more difficult. The sad part of it is that since those wage increases have been part of the economic environment for a while, it will not be possible to measure their impact if the recession actually occurs.
Economists will continue to debate the pros and cons of the economic impact of minimum wage increases. They can argue themselves blue in the face, and are welcome to it. My objection to the minimum wage increase is much more basic: I don't think a bunch of clowns inside the Beltway have any moral authority to tell a risk-taking businessman how to run his company. The way I see it, the businessman is the only one who knows how much his employees are worth to his company, and if people don't think it is enough, they can go work elsewhere. As a matter of principle, I don't like politicians involved in business.
jim |
