U.S. Labor Secretary Wrong to Suggest $15 Minimum Wage in Detroit

Detroit Deserves a Comeback, Not a Setback

According to MLive, U.S. Labor Secretary Tom Perez visited Detroit on Tuesday in a pre-Labor Day. Here's a snippet from MLive:

Labor organizers and fast food workers have been staging periodic protests calling for a $15-per-hour wage outside Detroit-area restaurants throughout the past two years drawing mixed reactions from passersby.

Perez has expressed support in the past for passage of $15 minimum wage measures in large cities.

"I believe the folks in those areas are in the best position to know what's best for their communities," he told the Huffington Post. "I think we need a federal floor that gets people above the poverty line, but we also need actions elsewhere."

He's right, folks in those areas are in the best position to know what's best for their communities. He's wrong to suggest that Washington, D.C. politicians have the solution with a $15 minimum wage.

Here's why!

Ponder this: If raising the minimum wage is the answer and it has no negative consequences at $15 per hour, why stop there? Why not $20? $25? $100? ... $500? 

The truth is simple: The_TRUTH_about_minimum_wage.png

First, raising the minimum wage doesn't help the workers that it is intended to help at the expense of the owner. It helps the most productive workers that would be better off over time at the expense of the least productive workers. This means that some low-skilled workers that otherwise would have jobs would no longer be employed as they are no longer producing enough value to justify the business' hiring costs.

Raising the minimum wage also destroys incentives for entrepreneurs and businesses to find ways to profitably employ workers whose limited skills prevent them from producing hourly outputs valued at least as high as the minimum wage.

Second, raising the minimum wage causes the rate of automation to increase faster than it would have if the minimum wage were not raised. 

The following from an article by Donald Boudreaux, a professor of economics at George Mason University, sums up the inhumanity of a minimum wage:

If the government instituted a minimum wage of $100 per hour and, therefore, made unlawful the profitable employment of all those people whose skills are too meager to enable them to produce at least $100 worth of output per hour, there would be a national uproar — and rightly so.

Yet when the government implements such a policy but in a way that outlaws the profitable employment only of people whose skill-sets are among the lowest, relatively few people object and many people — especially “Progressives” — applaud the policy as humane.

How sad. And how especially sad that many economists today, who above all should know better, lend their authority to such an inhumane policy.

 

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