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Kerry's Minimum Wage Proposal: Why Stop at $7?
John Kerry has boldly raised the stakes in the battle to be the champion of compassion by proposing an increase in the minimum wage to $7 an hour (click on "skip this add" when you access the link to see the article). This would be especially helpful to women, he notes. Sounds wonderful, but why stop there? A lot of women would be helped even more if they were making $50 an hour. But think how much better off they would be if they could make $100 an hour. Lots of people make this much money without working any harder than a typical single mother, so it's perfectly fair, though probably still not enough to make up for years of repression and lack of social justice. So let's set a minimum wage of $500 an hour for women. Voila - instant social justice, compassion, and seizing of the moral high ground. Only a chauvinistic bigot would be against my proposal (note that I am over 70 times as compassionate as John Kerry, with my $500 an hour proposal versus his miserly $7).
OK, women, how would you fare if the lowest amount you could make in any job was $500 an hour? It would sure be nice - if anyone had a job for you. Can you imagine how few jobs there would be for women if employers were forced to pay so much? If the job costs more than the benefit the worker provides, the job gets cut or replaced with someone else or with a machine or the company just bleeds and dies. $500 an hour for women would pretty much ensure that only males got jobs. Social justices?
Ah, the easy fix: $500 an hour for everybody! Then what? Any business that can't replace most of its workers with machines will go belly up. A high minimum wage would be one of the best ways possible to wreck the economy. So how does one decide what the proper minimum wage is, one that is consistent with what employers can afford to pay but is fair to the employer? To do that, one requires lots of information. God or John Kerry might be able to do it on their own, but a worker's wage is simply a price, and the most efficient way to set a fair price is to let the market do it. If employers are offering too little, they won't get applicants, and will feel natural pressure to raise their rates. If they are offering way too much, there will be a huge demand for their jobs (like lines a hundred yards long for people to apply for limited post office jobs), with an abundance of qualified applicants. The information flow occurs across the whole network of the economy, "the invisible hand" effect.
Part of the failure of Marxism, with its emphasis on centrally planned economies, is that no central committee can arbitrarily set prices and manage production goals and product distribution in anything but an inefficient manner. They replace the vast network of information conveyed by the market with the arbitrary whims of some egomaniac bureaucrats. The concept of a minimum wage is inherently Marxist, and has made life harder for the people John Kerry and other liberals claim to be helping. Those who are only qualified for entry level jobs will find new barriers to employment. If entry-level jobs for those with few marketable skills were scarce at $5.15 an hour, employers will be motivated to offer even fewer if they must now pay $7. If a teenager might be worth $4 an hour to me, that teenager can't get the $4 job, thanks to the Federal Government, even if the teenager was willing to work for $4 an hour. Minimum wage laws mean fewer jobs, and only harm the economy. And it's obvious when you ask the question, "Why stop at $7 an hour?" If $8 an hour would hurt the economy and mean fewer jobs, why is John Kerry so wise to know that $7 is the optimum level?
Any government price-setter is almost guaranteed to be wrong. Ditto for John Kerry.