My brain has hurt too much over the last several days to compose much more than a paragraph or two about some minimum wage stuff I was discussing with Dr. Hmnahmna. But here’s this:
There are a few problems with the minimum wage that don’t disappear no matter how high or low you set it. Actually, if you set it at zero, at least some of these problems will disappear, I suppose, but anyways, here’s one:
The minimum wage restricts job opportunities.
Wherever you set the minimum wage, you essentially ban every job that pays less. By fiat. Not because anybody found a more efficient way to get the job done (e.g., a technological advancement reduces the need for labor), but because the law says so. That’s inefficient, which is a cold way of saying it’s bad for the economy, so let me humanize the problem a bit more.
The minimum wage is bad for those workers who would benefit from building up their skills and résumé by working in jobs that pay less than minimum wage. Envision what would happen to most fast food jobs if the minimum wage were raised to, say, $20 an hour. Those jobs would probably disappear, likely replaced by machines or by much higher-skilled workers that we wouldn’t think of as normal fast food workers. And a wide range of opportunities to build up basic job skills would also disappear.
Now, nobody’s actually suggesting raising the minimum wage from its current level to $20 an hour– it’s too obvious that severe unemployment would result. But is it unreasonable to assume that the minimum wage has already had an effect similar to that described above? Is it unreasonable to assume that raising the minimum wage from $7.25 to the proposed $10.10 (almost a 40% increase) would similarly restrict jobs?
People are better off with more opportunities to work than they are with fewer opportunities to work. The minimum wage reduces those opportunities.
One might respond that, yes, the minimum wage puts some people out of work, but you can give those people welfare. Well, yes, you can, but you can give them welfare even if they have jobs, right? Wouldn’t they be better off with jobs so they can build up some skills and contacts and know-how? The two aren’t mutually exclusive– it’s not jobs or welfare. So why not eliminate the minimum wage, let workers get what jobs they can, and get what skills and experience and contacts they can? Wouldn’t taxpayers rather foot a smaller welfare bill for somebody already earning $5 an hour than a larger welfare bill for somebody who had no job at all?
It seems to me that when you’re climbing a ladder, it’s easier to get to the second rung from the first rung than it is from the ground. (Spare me the semantics and pedantry about removing the first rung, which would make the second rung the first rung.) In the same vein, it’s easier to climb to $10 an hour from a lower paying job than it is from joblessness.
Hopefully this makes sense. My head’s been hurting enough that I was just chatting with Dr. Hmnahmna about trephination.