The latest edition of Max Borders‘ Ideas Matter update features a discussion about the so-called “living wage.”
People don’t like to think that their labor is worth less than the minimum wage. People who feel sorry for those who would might end up flipping burgers for $5.00 an hour believe that the min wage is a way of paying some sort of ‘dignity premium’ or ‘living wage.’ They look at the direct beneficiaries of these policies: i.e. burger flippers making $7.50 an hour and pat themselves on the back. They rarely count the invisible costs: those willing human beings who never get hired in the first place.
Some will say: $5.00 an hour is not enough to live on! For whom? A teenager living at home with his mother? An elderly person who wants simply to stay active? A single mom with three kids? A single woman sharing an apartment with 2 roommates? Of course, not all of these people could live off $5 an hour, but certainly some of them could. It’s not clear that such conclusions justify a blanket minimum wage–even if we ignored the invisible costs of the policy, which include reduced margins to the business that might otherwise grow and hire more people.
If you pull take off the bottom two rungs of a ladder, you’ll never climb it. That’s the effect of the minimum wage. And the more cynical side of me says that’s how many politicians and overpaid union thugs want it.
Borders also highlights a video from Duquesne University professor Antony Davies:
