Saturday, January 5, 2013

Minimum wage commonsense...

This morning's NY Times editorial, And at the Bottom of the Wage Scale, argues for an increase in the federal minimum wage. The author links to a couple of studies that bolster the point. I merely peeked at those studies long enough to get their gist and make note of their authors' names. A few minutes of Googling and Youtubing showed them (two are common to both studies) to be union apologists and passionate warriors against income inequality. Of course that doesn't mean that they mined their data from areas most likely to confirm their biases. It doesn't mean that they left buried any data that didn't support their positions---positions they've spent their careers lecturing and publishing books on, right?

The following is a little something I wrote last year and have featured in my forthcoming daily devotional Leaving Liberty? We don't need complex equations, or measurements of elasticity to understand the perniciousness of government over-intrusion into the private sector. We simply need to apply a little real-world commonsense. And yes, the Walter Williams quote was the result of me mining for bias-confirming data.

DAY 26:
The City Discriminates against Teens and the Unskilled

When we're talking basic economics, politicians are either profoundly ignorant, or they assume we are.

You’d think that San Francisco would be the last place you’d find blatant discrimination against the young and the undertrained. But there’s no denying this one: effective January 1, 2012, the City By the Bay Where You Pay bumped its minimum wage to $10.24 an hour—making it the only city in America to breach the $10 mark, and the toughest place for a kid to get a job.

I didn’t even know this until I heard yesterday that San Franciscans will now have to pay up (consequently) for the Subway $5 Footlong. Going forward, $5 will only buy you 9.74 inches of sandwich. The new jingle, “Five dollar half-a-foot plus three- and-three-quarter-inch long,” just doesn’t stick in your brain like the old “five-dollar footlong” did.

But that’s the way of it folks. When we’re talking basic economics, politicians are either profoundly ignorant, or they assume we are.

Here’s Walter Williams (Williams, 2003) on forced minimums:
Minimum prices in general tend to discriminate against the lesser skilled person or the less preferred item. Let’s say ten workers show up and you only can hire five. Well, you can’t discriminate based on price because you have to pay them all eight dollars an hour. So you may hire according to what you like. So if you prefer Catholics to Jews or whites to blacks, you’ll have a tendency to indulge your preferences. You can apply that phenomena to anything. If we made a law, let’s call it a “minimum steak law,” that is, fillet mignon and chuck steak both sell for $10. Well, the cost of discriminating against chuck steak would be zero, because you have to pay $10 anyway. The way that less preferred things compete with more preferred things is by having a lower price. Even though people prefer fillet mignon to chuck steak, chuck steak doesn’t have any problems selling at all.


  1. [...] Here’s Don Boudreaux, on the best econ blog out there, offering a few links. He’s written volumes on the topic of late (his open letter to the President is featured below)—type in “minimum wage” in the search bar for more. And here’s one of my simple-minded contributions. [...]

  2. Sooooo..... There is no such thing as the $5footlong in S.F. ? I'm guessing they don't even run the commercial in S.F. How does one get rid of those pesky poor people? Intentionally increase costs so that the poor can't afford to live near you and then reduce their numbers, typical of breeding, is to advocate abortions... Even help pay for it...there must be a Law of economics to describe how when GOVT makes something free there is an abundance of demand and use. But, there is no shortage of supply when GOVT is paying the bill.