Last night’s SOTU was atrocious, but I think Don Boudreaux has singled out its worst line in the letter below — his plea for a higher minimum wage. For years I have argued that the function of the minimum wage is to get people to believe that raises come from compassionate politicians, not from their own efforts at working better and improving their skills. Obama’s speech is strong evidence for that. Here’s the letter:
21 January 2015

Pres. Barack Obama

Dear Mr. Obama:

In last-night’s State of the Union address you said “And to everyone in this Congress who still refuses to raise the minimum wage, I say this: If you truly believe you could work full-time and support a family on less than $15,000 a year, go try it. If not, vote to give millions of the hardest-working people in America a raise.”

The premise of your plea is mistaken: raises aren’t given by votes, by you, or by Congress: they’re given only by employers. And employers must fund these higher payments out of the revenues they earn by competing successfully in markets. Employers, therefore, can afford to raise their workers’ pay only if their workers become more productive – an outcome that is not achieved by a legislature waving its wand over workers’ paychecks.

You are, however, correct in one sense. Because the policy you propose would price many workers out of jobs, that policy would indeed change these workers’ incomes: it would drop them to $0. So I say this: If you truly believe you could be unemployed full-time and support a family on $0 a year, go try it. If not, vote to give millions of the hardest-working people in America opportunities to work that they are now denied. Abolish the minimum wage.

Sincerely,
Donald J. Boudreaux
Professor of Economics