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by The Leasing Group

Ask about anyone to weigh in on an increase in the minimum wage and you’re bound to get an emotional response.  As with abortion, gun control, and taxes, there’s very little middle ground on this issue.  The minimum wage is very polarizing topic.  Forget about changing minds.

 

For dissenters, the logic goes something like this…a free market system allocates resources, including labor, more efficiently than any other system.  Government interference only serves to disrupt this efficiency resulting in slower economic growth, higher labor costs and lower employment, all bad for businesses and for their workers.  Worse yet, the minimum wage is inflationary, and we all know what that means.  End of story.

 

I’m sure the intellectual thinkers of the day came to this conclusion honestly and without prejudice.  However, in its seventy-five year history, the minimum wage has not been the culprit feared by economic experts.

 

First, there is no evidence linking the minimum wage to a softening economy.  Second, with few exceptions, businesses don’t typically lay off workers just because of hourly wage increases.  Even when they do, unemployment does not necessarily rise.  Third, in a labor driven market, workers typically make more than the minimum anyway.  An increase rarely has the predicted impact.

 

For supporters, the arguments are more tangible.  With so many workers teetering at the poverty level, we’re all better off when workers and their families don’t require the public safety net.  And, since the cost of welfare in all its forms far exceeds the inflationary cost of wage increases, doesn’t a rising tide lift all boats?   Additionally, working families contribute to the tax base.

 

On balance, a modest increase in the minimum wage actually does more good than bad.  I think its time for conservatives (me included) to get out of the way.

 

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Truth about the Minimum Wage