Wednesday, January 10, 2007

Minimum Wage Mumbo Jumbo

The House of Representatives voted today to raise the federal minimum wage, with more than 80 Republicans tagging along.

Do these knuckleheads not realize that labor is a commodity? Someone of modest, or even rudementary, economics education would realize this obvious fact. What happens when the market price of a commodity is raised? Anyone? (Bueller?) The demand decreases. In this scenario, the market price (minimum wage) is increased on the commodity (labor) causing the demand (jobs) to decrease. Simple.

But there is also a "ripple" or "trickle" effect, whichever word may presently be in fashion. If employers are forced to pay their minimum wage employees more, and cannot do without their labor, they must pass this added expense to the consumer in the form of a higher price.

And let us not forget the beloved labor unions (remember the Longshoremen's strike? A union job that does not even require a high school education, and pays over $100 k a year? And it still is not enough). There is this thingie called union wage scale. When the minimum wage is increased, the union scale must be increased as well, or the labor union bosses will get a hair across their collective ass. And the Democrat Party is beholden to the labor unions.

And as far as a so-called living wage is concerned: Minimum wage was never meant to be a living wage. It was meant to be a low-risk way that an employer could test an employee over a probationary period to decide if the employee was worth keeping or not. If yes, the new employee would quickly be given a raise. If not, they would be given a pink slip and shown the door. Incedentally, there are only about haf a million people in the United States making minimum wage, and many of them are students with part-time jobs or on summer break.

Do not forget the result of raising the minimum wage: Higher prices for goods and services, and fewer jobs to go around. Sounds great!

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