I wrote the author a quick critique of this piece which I have placed following the article at the bottom of the post.
Making the Minimalist Case for the Minimum Wage
By: Michael
Kinsley, February 20, 2013, Bloomberg News
Even a conservative who ordinarily doesn’t care much for
government regulation of business ought to find the case for a
government-mandated minimum wage pretty compelling. In brief: As a conservative,
you believe in the dignity of work. And it sends a terrible message about the
dignity of work when working full-time doesn’t earn you enough to live a decent
life.
On the other
hand, even a committed liberal who’s concerned about growing income inequality
ought to have some doubts about the minimum wage. The minimum wage reduces
employment (or “destroys jobs,” as the accusation is usually put) by pricing
people out of the market.
When two
people (let us call them “worker” and “boss”) voluntarily make a deal, we can
presume it must be good for both of them. Otherwise, they wouldn’t do it. This
logic applies to employment deals just like any others. No one is forced to
take any job, so when someone does take a job, we may surmise that he or she
finds this job, at the pay being offered, preferable to other available jobs --
or to no job at all. By what right and what logic do we step in and say: No,
this is a deal you’re not allowed to make?
No Help
You may say
that when an unemployed worker with a family to support takes a nasty job at a
low wage out of desperation, this is hardly the kind of voluntary free-market
decision contemplated by Adam Smith. But unless you’re offering a better job or
a better wage, simply forbidding this particular deal is of less than no help.
The minimum wage restricts workers as well as bosses: It forbids both
categories of economic actor from making a deal they wish to make.
The current
federal minimum wage is $7.25 an hour, a figure that reflects our ambivalence
about the whole idea. A wage of $7.25 an hour amounts to $15,080 a year. At this rate,
we’re violating the principle of free markets by having a minimum wage of any
level. But $15,080 isn’t enough for anyone -- let alone any family -- to live
on with dignity.
President
Barack Obama proposes to raise the minimum wage to $9 an hour from $7.25 an
hour. Economics tells us that this will destroy jobs. Anyone whose hourly work
is worth more than
$7.25 but less than $9 will become unemployable. What
kind of favor is this to them?
Critics of the
minimum wage like to say that it slices the bottom off the ladder of success.
You might be able to work your economic value up from nothing to five bucks an
hour to $9 an hour or (we may hope) even more. (Nine dollars an hour is still
only $18,720 a year. Good luck.) But if you can’t even start the great game of
life until you’re worth $9 an hour, the challenge is greater.
There are
studies suggesting that the minimum wage doesn’t really destroy jobs. These get
hauled out whenever an increase in the minimum wage is contemplated. They are
hard to believe.
In fact, I don’t believe them. The conclusion is just too
counterintuitive and too convenient.
Critics of the
minimum wage think this is the end of the story. To them, the minimum wage is
just an anachronism from the New Deal, a sop to people who don’t believe or
don’t understand the basic principles of economics.
Yet many
government policies violate basic principles of economics and therefore reduce
our prosperity. A perfectly legitimate answer to this objection is, “So what?”
A prosperous society such as the U.S. can afford to give up some prosperity in
exchange for more equality or some other social goal.
No Thanks
If we were to
ask people who actually do work at the minimum wage whether they would like to
see it abolished, most undoubtedly would say, “No, thank you.” Is this because
they don’t know economics? Because they don’t realize how the minimum wage
could take away their jobs? Because they’re crazy or duped by left-wingers who
love red tape and hate America and want to see our economy strangled?
Not
necessarily. Minimum-wage workers might quite reasonably think: “This is a
gamble. But it’s a gamble worth taking. Maybe I’ll end up without a job, but
maybe I’ll end up with a raise of $1.75 an hour.” That doesn’t sound like much
of a raise, but it’s 24 percent.
You can’t know
for sure in advance which effect the minimum-wage increase will have on any
particular person: A raise? Or unemployment? But it’s far from irrational for
minimum-wage workers to conclude at some point that the risk of losing their
jobs is worth taking in exchange for the certainty of a raise. It depends on
the size of the risk and the size of the raise.
Of course,
it’s possible that a policy such as the minimum wage might be bad for society
even if it’s good for the individuals most closely affected by it. So you go
and tell someone making $7.25 or even a whopping $9 an hour that you want to
eliminate the minimum wage for his or her own good. I’m not going to.
(Michael
Kinsley is a Bloomberg View columnist. The opinions expressed are his own.)
LIVING THE DREAM RESPONSE TO KINSLEY:
I enjoyed your article. I am of the Californian libertarian/conservative bent.
I'm not an economist but it looks like you did a (relatively) fair job in outlining the gives and takes of the policies with an outline of the human face. The faces I would like to also have seen (or better outlined) are those who are currently unemployed or those trying to enter the work force that would then face an even larger barrier to employment as the bar is raised. How about amending the article to END with that face and not the (entrepreneurial?) gambler seeking a higher rung on the American dream. Additionally, a little recongnition that families bind together and frequently bring in multiple incomes and, if forturnate enough, have multiple jobs.
Thanks.
No comments:
Post a Comment