Minimum Wage Again - Another Fallacy
The minimum wage reared its ugly illogic Wednesday (7/11/07) in a Wall Street Journal piece by Bradley Schiller. While I mostly agree with his criticism of the new $5.85 federal minimum wage, one thing he said stuck in my craw.
What bothered me is his assertion that the minimum wage is irrelevant because wages are already above that level. He mentions this twice. First, he says that "entry wages at McDonald's" were already "above $7." Then he says that "labor market wages [are] already significantly above $5.85."
Schiller is a professor in Washington DC. It may well be that entry level wages in DC (and New York City, Los Angeles, and other big cities) are above $7/hour. But like supporters of minimum wage, he ignores places where wages are lower. There are plenty of areas where some people earn $6/hour or less.
In many cases, the jobs that pay such low wages are in small businesses and non-profits. Those who run them pay low because they simply can't afford to pay more. Raise the minimum wage for and some of these businesses will close. Others will stay open, but the increased labor costs come directly out of the pocket of the business owner. There is no minimum wage for small business owners. This is not about Warren Buffett or Bill Gates. I'm talking about Sal's Pizza.
Schiller's analysis ignores the damage that minimum wage can do to small businesses and non-profits in poor communities. Minimum wage is based on what the majority of the population thinks (we still live in something of a democracy). Over 75% of the US population lives in cities, which tend to be wealthier than rural areas. There's a lot more money in Albany than there is in Gloversville, and a whole lot more money in New York City and DC than there is in Albany. A uniform minimum wage doesn't even make sense on a state level. It certainly doesn't make sense on a national level.
What bothered me is his assertion that the minimum wage is irrelevant because wages are already above that level. He mentions this twice. First, he says that "entry wages at McDonald's" were already "above $7." Then he says that "labor market wages [are] already significantly above $5.85."
Schiller is a professor in Washington DC. It may well be that entry level wages in DC (and New York City, Los Angeles, and other big cities) are above $7/hour. But like supporters of minimum wage, he ignores places where wages are lower. There are plenty of areas where some people earn $6/hour or less.
In many cases, the jobs that pay such low wages are in small businesses and non-profits. Those who run them pay low because they simply can't afford to pay more. Raise the minimum wage for and some of these businesses will close. Others will stay open, but the increased labor costs come directly out of the pocket of the business owner. There is no minimum wage for small business owners. This is not about Warren Buffett or Bill Gates. I'm talking about Sal's Pizza.
Schiller's analysis ignores the damage that minimum wage can do to small businesses and non-profits in poor communities. Minimum wage is based on what the majority of the population thinks (we still live in something of a democracy). Over 75% of the US population lives in cities, which tend to be wealthier than rural areas. There's a lot more money in Albany than there is in Gloversville, and a whole lot more money in New York City and DC than there is in Albany. A uniform minimum wage doesn't even make sense on a state level. It certainly doesn't make sense on a national level.
Labels: minimum wage
posted by Albany Lawyer at 11:47 PM
2 Comments:
Complain all you want about the minimum wage... you will never win NY-21 with that attitude.
For all of McNulty's faults (he once sent me a form letter supporting an issue I wrote him opposing) he is in touch with regular, working class Americans. You seem to be of the "outsource all our jobs and let foreign business take over, pay the people who aren't unemployed $2/hour!" mentality. Not a smart attitude in an area where so many factories have shut down because there wasn't enough government protectionism.
Hope to see you as the sacrificial lamb again on the 08 ballot so I can vote for McNulty again. Drop me a line if you want.
-Nick Cassaro Delmar, NY
ncassaro@mail.rochester.edu
PS- McNulty forever!
Thanks Nick. Of course I disagree. Most of our local jobs are with the government these days. The private sector jobs that were outsourced went to Georgia, if I remember correctly.
I am not opposed to outsourcing, domestic or foreign, but I do not believe this means foreign business will take over.
It does seem that many regular Americans are sympathetic with your views. Too bad no one wants to pay attention to simple economics. Trade is good. Trade barriers are bad.
Nick would rather believe the liberals (and these days, the conservatives too) and wait for the government to provide us all with high-paying jobs on 30-hour work weeks and it will all work out somehow.
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