Sowell: Minimum wage madness leads to rising unemployment

[LibertyEagle]

By Thomas Sowell, Columbian Syndicated Columnist
Published: September 17, 2013

Political crusades for raising the minimum wage are back again. Advocates of minimum wage laws often give themselves credit for being more "compassionate" toward "the poor." But they seldom bother to check the actual consequences of such laws.

One of the simplest and most fundamental economic principles is that people tend to buy more when the price is lower and less when the price is higher. Yet advocates of minimum wage laws seem to think that the government can raise the price of labor without reducing the amount of labor that will be hired.

When you turn from economic principles to hard facts, the case against minimum wage laws is even stronger. Countries with minimum wage laws almost invariably have higher rates of unemployment than countries without minimum wage laws.

read the rest...

 

[oyarde]

Yes , yes it will .

 

[gwax23]

Great read. Thanks!

 

[cubical]

Why can't he be the leader of the Black community, rather than Jackson or Sharpton? I could listen to him speak on common sense economics all day.

 

[thoughtomator]

It does, but it's a drop in the bucket compared to the other things going on... the big three being monetary abuse, regulation, and taxes.

 

[gwax23]

It does, but it's a drop in the bucket compared to the other things going on... the big three being monetary abuse, regulation, and taxes.

This is a regulation of business. Its just a specific type.

Why can't he be the leader of the Black community, rather than Jackson or Sharpton? I could listen to him speak on common sense economics all day.

this

 

[RJB]

The Fed is responsible for inflation. By the time Democrats pretend they care about the poor and talk about raising the minimum wage, most of the bottom earners earn more than it anyway. The republicans act concerned about rising inflation and the blame gets laid at this non-issue. Simple answer: End the Fed.

One of the biggest rip-offs is that they convinced people that On-the-job training for half of minimum wage is wrong. However, now instead of OJT, people have to go indebt to schools where they learn absolutely nothing of value, then they do an internship where they PAY TO WORK for someone else. Lots of scams going on these days. Government and corporate = a rock and a hard place.

 

[thoughtomator]

This is a regulation of business. Its just a specific type.

In terms of regulations affecting businesses, minimum wage just isn't that big a factor with so many other impositions on the books. The single biggest regulation strangling business is the imposition of health care costs on them. Your health insurance shouldn't be tied to your employer in an age when working for a single company your whole life is an obsolete concept.

 

[RJB]

ETA: I got side tracked with inflation but seriously, when have you ever seen a McDonalds understaffed due to a rise in minimum wage? I'm not aware of any study that shows a statistical correlation with rise in unemployment (or inflation) after a minimum wage increase. It is usually enacted after the fact to due to our monetary system.

Of course, I'm against the minimum wage on principle, but we're missing the big issue: The monetary system. End the Fed!!!

 

[PRB]

"Countries with minimum wage laws almost invariably have higher rates of unemployment than countries without minimum wage laws. " I personally believe this, and it makes sense, but is there any actual evidence for this? And are all other factors excluded as alternative explanations? Minimum wages have never decreased, so shouldn't we expect employment to always decrease year after year?

 

[PRB]

ETA: I got side tract with inflation but seriously, when have you ever seen a McDonalds understaffed due to a rise in minimum wage? I'm not aware of any study that shows a statistical correlation with rise in unemployment (or inflation) after a minimum wage increase. It is usually enacted after the fact to due to our monetary system.

Of course, I'm against the minimum wage on principle, but we're missing the big issue: The monetary system. End the Fed!!!

Even if raising wages doesn't decrease employment, another problem it can cause is higher living costs, meaning the people who complain they can't make a living on minimum wage, will still complain because the moment they can afford it, the costs will go up again, unless the government caps it.

 

[RJB]

Even if raising wages doesn't decrease employment, another problem it can cause is higher living costs, meaning the people who complain they can't make a living on minimum wage, will still complain because the moment they can afford it, the costs will go up again, unless the government caps it.

The minimum wage increase is not related to the cost of living increase (inflation). The Federal Reserve system is responsible. As I mentioned above:

By the time Democrats pretend they care about the poor and talk about raising the minimum wage, most of the bottom earners earn more than it anyway.

 

[angelatc]

ETA: I got side tracked with inflation but seriously, when have you ever seen a McDonalds understaffed due to a rise in minimum wage? !

Its not only the mega-corporations that feel the pinch. It's the smaller businesses. In our town there was a small upscale boutique that sold some some things on consignment mixed in with some new stuff.

She recently closed the doors because the schedules of her husband and son changed, which meant that she was moving furniture around with no help, and it just wasn't fun any more.

She told me that if she could hire a high school kid for a few hours at $5.00 an hour after school a couple of days a week that it would have been workable, but she really couldn't afford to pay much more, and the increase in paperwork for her just made it too much of a PITA. (Of course the liberals think that if she was not making enough to pay people $20 an hour she doesn't need to be running a business, but that's another topic.)

And a minimum wage isn't just minimum wage. Raising minimum wage by $1.00 means an increase of at least $1.08 to the employer with the FICA expense.

 

[angelatc]

"Countries with minimum wage laws almost invariably have higher rates of unemployment than countries without minimum wage laws. " I personally believe this, and it makes sense, but is there any actual evidence for this??

Uh, yeah. Holds true for the individual states too.

 

[PRB]

Uh, yeah. Holds true for the individual states too.

actual examples please? or better yet, are there actual examples of the same state or country decreasing in employment after a mandatory minimum wage increase? (comparing state to state is pointless unless you assume all other possible factors are equal)

 

[angelatc]

Dear god, the oh-so-condescending smarter-than-you-are liberals have invaded again, pretending to agree, but just having a few questions....

actual examples please?


or better yet, are there actual examples of the same state or country decreasing in employment after a mandatory minimum wage increase? (comparing state to state is pointless unless you assume all other possible factors are equal)

Sorry I made the mistake of taking to you. I should have recognized a troll when I saw it. All I can suggest is that Google is your friend.

 

[Dr. Dog]

The minimum wage increase is not related to the cost of living increase (inflation). The Federal Reserve system is responsible. As I mentioned above:

Countries with higher minimum wages tend to how more expensive consumer goods. Compare Australia and Switzerland, both of which have high minimum wages and cost of living, with the US, with (relatively) low minimum wages and cost of living.

 

[PRB]

Dear god, the oh-so-condescending smarter-than-you-are liberals have invaded again, pretending to agree, but just having a few questions....

Sorry I made the mistake of taking to you. I should have recognized a troll when I saw it. All I can suggest is that Google is your friend.

if it was so easy you'd have posted it by now. I'm a liberal because I'm asking for evidence for something I agree with you on and want to believe?

 

[PRB]

Countries with higher minimum wages tend to how more expensive consumer goods. Compare Australia and Switzerland, both of which have high minimum wages and cost of living, with the US, with (relatively) low minimum wages and cost of living.

or just ask this guy, how does inflation work. Last time I checked, any time there's an increase in money supply, or more specifically, when money is in the hand of consumers, purchasing power of consumers goes up (temporarily), which in turn causes prices to go up and each dollar's value/purchasing power drops. I don't see how raising wages isn't a form of causing inflation, even if the Fed does most of it.

 

[Madison320]

In terms of regulations affecting businesses, minimum wage just isn't that big a factor with so many other impositions on the books. The single biggest regulation strangling business is the imposition of health care costs on them. Your health insurance shouldn't be tied to your employer in an age when working for a single company your whole life is an obsolete concept.

It depends on how high the minimum wage is. I heard them talking about raising it to $10 an hour. That'll do some noticable damage.