Sunday, July 09, 2006

Is an increased minimum wage really a good idea?

I'm throwing this out here mostly to become more informed on the issue. I am not an economist, but it seems to me that if the minimum wage goes up, regular wages go up, too. That may not seem bad, right? But that means the cost of business goes up and that extra cost is ultimately passed on to the consumers. So, in effect, everything goes up. Now, of course I think people should be paid a liveable wage, but is raising the minimum wage the ONLY way to do it? What are your thoughts?

Comments on "Is an increased minimum wage really a good idea?"

 

Blogger Jerry said ... (7:49 AM) : 

Well, certainly, that's the gist of the problem. What often gets ignored in a minimum wage increase is that all hourly wages usually end up increasing, not just those wages at the bottom. which significantly increases costs of production and the cost of goods sold. While the increase doesn't tend to affect the middle class and the wealthy as much, the very people that government sought to benefit in the first place find themselves in the exact same position as they were in before--barely making ends meet.

It's hard to say, however, that the increased costs are going to be just as high as the original increases. It isn't a dollar-for-dollar change, because we don't live in a closed economy. If wages increase, expect continued expansion of the world market, with its much cheaper labor. Expect also more illegal immigration, because small businesses have even more reason to pay substandard wages.

There's no easy solution to alleviating poverty, it would seem, and any supposed solution comes with a laundry list of attending consequences.

In my view, raising the minimum wage is about the worst of any of these "solutions"--it's not very well thought out. It merely stands for the proposition that if people get more money they'll be more wealthy. But that's usually the depth at which politicians and the public operate, because it's so tiresome to take the time to think.

And if you really want to see minds boggled, try explaining why the national deficits have been cut almost in half since 2004 (as per the president's promise), with all these increases in government spending on terrorism.

 

Blogger Trisha said ... (3:08 PM) : 

I never equated illegal immigration with the minimum wage, but I see how they are related now! Thanks for the great insight, Jerry :)

 

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