Barron's 'Economic Beat' columnist tackles minimum wage myths
Published February 24, 2014
by Mitch Kokai, The Locker Room, John Locke Foundation, February 24, 2014.
Gene Epstein of Barron’s devotes his latest column to explaining why the government-mandated minimum wage fails to live up to its promise of helping the poor.
The debate over raising the federal minimum wage to $10.10 an hour from the current $7.25 heated up last week with the publication of a Congressional Budget Office study, which estimated that total employment would likely be reduced by “500,000 workers” if the hike were implemented.
While the CBO’s scenario made sense, a truly substantive debate about the minimum wage would start with the merits of abolishing it altogether, while seeking to help poor people through more direct means. Instead of decreeing that the unskilled can’t accept certain low-wage offers, thereby condemning many to joblessness, allow them to consider all of the potential options. But to the extent that low-paid workers are part of poor families—and many are not—help them in other ways.
Ironically, Nobel laureate economist Joseph Stiglitz, an advocate of hiking the minimum wage and critic of the CBO report, sensibly opined in his textbook Economics that “the minimum wage is not a good way of trying to deal with problems of poverty.” His point: Since many minimum-wage workers aren’t poor, this is yet another case of the government trying to solve a problem with a blunt instrument. The same CBO study he criticized bears him out, estimating minimum-wage workers’ median family incomes at $30,000, which shows that most live in families well above the poverty line, given that many have multiple workers.
BECAUSE ON-THE-JOB TRAINING is the most effective kind, the best way for people to better themselves materially is through working. A National Bureau of Economic Research study, “Minimum Wage Effects in the Longer Run,” concluded that the “longer-run effects” of “diminished training and skill acquisition” are “likely more significant” than the harm done by the minimum wage in the short run through reduced employment.
February 24, 2014 at 9:11 am
Richard Bunce says:
Wow, common sense breaking out all over NC Spin. The minimum wage for the business owner (aka employer) is $0... or less.
March 5, 2014 at 10:18 am
Rip Arrowood says:
If you go to a casino are you guaranteed to win?
March 5, 2014 at 4:35 pm
Richard Bunce says:
Said the employer to the employee...
February 24, 2014 at 11:53 am
Rip Arrowood says:
Dropping minimum wages altogether would ensure employers a pool of cheap unskilled labor who could be worked until they drop (OJT) and then easily be replaced.
You get what you pay for...
February 24, 2014 at 5:34 pm
Richard Bunce says:
... the employees would be free to work for whatever compensation would be offered. The business owner (aka employer) minimum wage is $0... or less.
February 25, 2014 at 1:27 pm
Rip Arrowood says:
That's a great idea - for employers - since there is on average one job opening for every 3 out-of-work citizens in NC.
February 25, 2014 at 6:16 pm
Richard Bunce says:
March 5, 2014 at 10:17 am
Rip Arrowood says:
That would look good on a bumper sticker....but it means very little in the scope of this issue.
March 5, 2014 at 4:38 pm
Richard Bunce says:
Yes the person who has everything at risk (the business owner /employer) is rightfully guaranteed nothing by the government while the person who has nothing at risk (the employee) is wrongfully guaranteed everything by the government... has a lot to do with voting math.
