Saturday, July 11, 2009

Work Study

Hey I'm not complaining cause I really need the work
Hitting up my buddy's got me feeling like a jerk
Hundred dollar car note, two hundred rent
I get a check on friday, but it's all ready spent
--Huey Lewis & The News

I continue to be amazed about how little people seem to understand minimum wage laws. As Peter Schiff deftly explains, minimum wage laws lock productive earners out from low paying jobs. Qualified talent willing to work for $6/hr is legally banned from a market where $7.25 is the minimum. Because the price of labor goes up, employer demand for labor goes down.

Perversely, the demographic that purportedly benefits the most, low income wage earners, is damaged the most.

So who benefits? Following the money leads us toward politicians and collective bargaining units that vote for them. Wage minimums raise barriers to entry into job markets where unions have a presence.

But even the union's advantage is temporary, as markets will be made in other parts of the world for buyers and sellers of labor at the unmessed with price.
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1 comment:

Rabmanducky said...

I would agree with you that some jobs people are willing to work for a lower wage then required min wage. However that is in a perfect world. As an economist major I found out that theory is diffrent then reality. Where the world should work in a perfectly ordered supply and demand model or even the most complicated supply/demand model but it just doesnt. Like if you said wages would naturally gravitate towards an equilibrium where no domestic worker will work below that price,but as we know businesses gets behind those rules by finding international workers who are willing to work in the country for a fraction of that min wage. As we all know from the last couple of years, when you tell businesses there are no rules, they will act accodingly.

July 20, 2009 at 11:57 AM

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