Well, the preliminary results are in from the latest rise in the national minimum wage. This is of course a hot button issue for many people who think they ought to be earning more. It’s also a hot button for leftward leaning politicians who see the millions earned by individual CEOs and the like, who think the money ought to be spread out a little more among the workers. The minimum wage is one of those tools that socialists and would-be socialists use to try to engineer the economy, to keep the rich from getting richer and the poor from getting poorer.
I submit to the court of public opinion (or at least my admittedly small pool of readers) the following article, published by CBS news.
The article is surprising balanced between those who support minimum wages and those who suffer the effects–higher unemployment, fewer jobs created, reductions in hours worked…all the things that are specially prescribed to hasten the economic recovery, right? Perhaps the most perceptive attitude is the one taken by the lady in the article who looks forward to getting a raise–if she actually gets to keep her job.
More puzzling, but less surprising, is the opinion expressed by Labor Secretary Hilda Solis, who asserts that the rise will amount to an extra $5.5 billion in consumer spending. By whom? The people who lose their jobs or don’t get jobs? The people who are saving their newfound wealth for when they get laid off too? This figure surely assumes that businesses have an extra couple of billion to spend on rising wages, and won’t cut spending in a recession.
And farther out on the political spectrum we have Holly Sklar, the senior policy advisor (fair enough; she’s clearly not much as an economic advisor) for something called Let Justice Roll, a group who wants to institute a $10 minimum wage by 2010. “You can’t have an economy that’s based heavily on consumer purchasing power, and at the same time, not pay the consumer enough to live on,” she says, neatly tumbling into the economic fallacy that working with bigger numbers automatically translates into additional wealth.
But I digress. The socialists say they want to reduce inequalities of income, to stop the “rich get richer, poor get poorer” cycle. The thing is, as we see in the article, some people do see salary increases–whether that translates into greater wealth, of course, depends on whether that increase translates into general inflation. But a lot of people end up losing their jobs, simply because their services aren’t worth $7.25 an hour–thus making the poorest of the poor poorer still by rendering them unemployable. Considering that these are the people the socialists are supposedly trying to help, doesn’t this seem self-defeating?
2013 Addendum–Since writing this article (has it really been almost four years?), it has been suggested to me that there is no evidence directly tying the rising minimum wage to increases in inflation. Perhaps not–after all, the economy is a complex thing, and it is difficult to tie definitively any single effect to any single cause. However, there would seem to be a connection between the rising minimum wage and the trend of exporting jobs to places where labor is cheaper, which frankly doesn’t do much for lower earners either.