Sen. Bernie Sanders (I-Vt.) and I have the same goals: better, higher paying jobs for everyone, especially for the poor, and a radical reduction in their horrendously high unemployment rates.
We only disagree on the best means toward this goal. While he thinks a minimum wage of $15 per hour would pretty much do the trick, I think it would be a disaster, not only economically, but also ethically.
Why do I insist upon this seemingly unlikely view? Would it not be better if the wages of the unskilled were boosted upward toward this rather modest goal? After all, it is very difficult to live on a mere $7.25 per hour, and, if somehow this legislation were eliminated entirely, would wages not plummet toward zero? This is the view held by many well-meaning folks.
Well-meaning as it may be, it’s also entirely erroneous. Wage legislation isn’t like a floor, holding up payments to labor. Rather, it is akin to tearing off the bottom rungs of the employment ladder. Let me explain.
The Privatization of R…
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Why do employers want to hire workers in the first place? It’s for their productivity (technically, marginal revenue product). Consider Joe, whose productivity is $5 per hour. This means if you have Joe on your shop floor, behind a counter, pushing a broom, or washing dishes for you, your receipts increase by that precise amount: five bucks per hour.
In the absence of any minimum wage at all, what would the firm offer him? Well, like everyone else, as little as possible. Even you, gentle reader when you purchase something, don’t you look for bargains? If not, you are unique. Suppose it is 1 cent per hour. If Joe takes him up on this offer,…