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If we're going to deal with "income inequality" more is always better, right?

Obama’s minimum wage increase - why stop at $9.00? Let’s make it $20.00!



From minimum wage fast food workers to multi-millionaire Presidents like Barack Obama, everyone loves money. When you've got it, life's a lot easier. When you don't, it's easy to fall into the trap of jealousy and entitlement. If you need evidence of that, look no further than the 2012 election, where Democrats exploited a class warfare campaign to resounding success. During last night's State of the Union address, Obama continued that narrative by proposing an increase in the minimum wage. If he gets his way, he'd like it to be $9.00 an hour.
It may be the worst idea among a litany of terrible proposals. The most obvious effect of a higher minimum wage is higher prices. The cost of consumer goods includes the cost of the labor required to produce, ship, stock, and sell. If the baseline cost of creating an item increases, so does the cost of every step in the supply line. All of those increases are factored into the final sale price, as the cost is passed on to the end user. So, if you're earning minimum wage, you may receive a larger paycheck but it won't necessarily help you purchase more, since the cost of what you buy has gone up accordingly. Economists call this "cost-push inflation."

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These high prices disproportionately injure small businesses, since they do less volume and typically pay more for the things they stock. This leads to a decrease in small business startups, hiring, and profit. The end result is more unemployment, as the increased wages shrink the size of the workforce. According to a study completed last summer by the Employment Policies Institute a minimum wage increase to $9.80 (a Democrat proposal at the time) would cost the country over three quarters of a million jobs. As the institute puts it, "Advocates for a higher minimum wage rely on a handful of outlying studies to make the case that a higher minimum wage has no effect on employment. Yet according to economists at the University of California-Irvine and the Federal Reserve Board, 85 percent of the most credible studies on the subject from the last two decades point to job loss following an increase in the minimum wage." These losses overwhelmingly target America's lowest paid employees. “The economic consensus on raising the minimum wage is clear, and these latest proposals are no exception,” said Michael Saltsman, EPI research fellow. “Instead of reducing poverty rates, a higher minimum wage reduces employment for the least-skilled jobseekers.” So, the very people that are supposed to benefit from a wage hike are the ones it will most severely damage. Of course, less people in the workforce means less people are paying taxes, resulting in a loss of revenue for the all-important federal government. Proponents of the increase say that the minimum wage today, if you adjust for inflation, would be over $10.00. This is an argument for dealing with the United States's painfully high inflation levels. It doesn't mean we should keep increasing them by artificially boosting pay rates. At a time where we're already headed for an ugly inflationary bout thanks to a diminishing dollar, the worst thing we could do is speed the process via cost-push inflation. Still, if you're a statist progressive, you believe that all of the above is nonsense. You argue that an across-the-board increase in pay will lift everyone equally. Sure, evil corporations will be forced to deal with less profit, but they won't pass those losses on, and there will be little or no negative effect to the consumer or the worker. This is idiotic, but it's what you believe. If it's true, why stop at a timid $9.00? If government is going to impose such mandates, because the detrimental impact of an increase is so minimal, let's raise it to $20.00! Better yet, how 'bout $40.00? Certainly, if we're going to deal with the boogeyman of "income inequality," more is always better right? Oh, our shrinking workforce and stagnating economy "won't bear" that? Then why should we believe it will bear $9?


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Dan Calabrese -- Bio and Archives

Dan Calabrese’s column is distributed by HermanCain.com, which can be found at HermanCain

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