Craig Westover – maybe the best libertarian-conservative intellectual writer in Minnesota today – took the “con” side of the minimum wage debate in the Strib last week, and stuck the landing:
Consider studies “proving” that when the minimum wage is raised, employers do not raise consumer prices. Because other economic forces are always in play, indeed, little quantitative effect may be seen in an industry affected by the minimum wage. What remain unseen, however, are the qualitative effects of the arbitrary wage increase on the industry and quantitative effects on the economy as a whole.
Raising prices is not as simple as changing an item’s price tag. Prices are always determined by what the market will pay and not by what the vendor needs or wants to charge. Not all cost increases can be passed on to consumers in higher prices.
If raising the price of a product or service in response to an increase in minimum wage drives the price higher than some people are willing to pay, they will buy less of the product or stop buying the product altogether and switch to substitutes.
Consequently, while some workers benefit from an increase in minimum wage, others in supplier industries suffer through job loss or lower wages resulting from the reduced demand for their products and labor. Eventually, even the boost in income for the few is offset by higher prices and lower future wages brought on by reduced economic growth — a net loss for them and the whole community.
Studies that claim to affirm the harmlessness of the minimum wage have to cherry-pick their criteria pretty closely.
Read Westover’s entire piece.
And Westover only covers the pure economics. Libertarian-GOP activist Jake Barnett, writing about Westover’s piece on Facebook, adds:
“Craig Westover makes a sound economic argument here. Personally, I think that’s only half the issue. A significant portion of campaign contributions of those who make social justice arguments about the minimum wage come from trade and government unions. It just so happens that the majority of Union Contracts are tied to the minimum wage, and the pay of workers under these contracts would rise a result of a passage of this bill. I’m sure we’ll hear well intended emotional arguments from the dupes on the left who believe politicians seek first to help the poor, but we all know better. A DFL led legislature and Governor wish to increase their campaign funds for the next cycle, and this is an easy way to do so while pandering to their base. Now where’s that mission accomplished banner?”
SEIU will be waving one around the the end of the session.
Dime’ll getcha a buck the banner will be made in China.
Comments welcome at Shot In The Dark.