Minimum Wage Increases: The Left s Magic Boat Strategy for Higher Wages. Western Pallet Association Palm Springs, January 15, 2017
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1 Minimum Wage Increases: The Left s Magic Boat Strategy for Higher Wages Western Pallet Association Palm Springs, January 15, 2017
2 Compassionate Innumeracy The minimum wage debate is basically a fight between good intentions and common sense. Most Americans (unfortunately) support increases because they think higher wages are a nice idea. Though unions have a more narrow agenda cascading and competition.
3 A Simple Economics Lesson
4 Winning the Minds of Leftists Ask what share of workers will lose their jobs with a minimum wage of $1,000 per hour? Then $500 per hour? Then $100 per hour? Then $50 per hour? Lather, rinse, repeat.
5 Doesn t Win their Hearts Critics thought it was big news when the left-leaning Congressional Budget Office admitted a higher minimum wage would destroy 500,000 jobs. Leftists shrugged and said it was more important that millions of workers would get a pay increase.
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7 Academic Evidence Doesn t Matter The clear majority of academic studies show that higher minimum wages hurt low-skilled workers. Neither the public nor policy makers care. In part because they can always cite studies on the other side. In part because nobody believes academics.
8 Impact of GOP Control? In theory, Republican control of House, Senate, and White House should kill any chance of a minimum wage hike. Maybe There was no minimum wage increase during Reagan s presidency. But GOP Congress in mid-1990s approved an increase.
9 Impact of Donald Trump? Trump has been all over the map. For a $10 minimum wage. For no change. For letting states decide. If Trump sells out, enough other GOPers will capitulate. Wild card: Andrew Puzder (Trump s pick for DoL) is very sound on issue.
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11 Don t Ignore the States The left and unions are having considerable success with initiatives to mandate higher minimum wages. In 2016 Voters in Arizona, Colorado and Maine approved $12 wage mandate by 2020 Voters in Washington okayed $13.50 Expect more initiatives in 2018.
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13 Other Considerations: Inequality The left is fixated on inequality. They think the economy is a fixed pie, so the rest of us are poorer because Bill Gates is rich. As such, they think a minimum wage hike is simply a way of letting lower income people have a bigger slice of the economic pie.
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15 Other Considerations: Distribution Related to inequality, but this is really about long-run share of income to labor and capital. In recent years, income earned by capital has grown faster than income earned by labor. The left views this as a bad/sinister development and wants intervention.
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17 Other Considerations: Culture Wars Identity politics is very important on the left. To the extent that women and minorities are over-represented among those earning the minimum wage, they view that as bad/sinister. They think government should enforce equality of outcomes.
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19 Other Considerations: Keynesianism Proponents of Keynesian economics think that consumer spending drives the economy. They therefore believe that a higher minimum wage will boost growth since lower-income people have a higher propensity to consume. Perpetual motion machine economics.
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21 Other Considerations: Monopsony Many people on the left think that employers have vast powers to dictate wages. Minimum wages therefore are needed to prevent a nation of wage slaves. But if employers have this power, why do 90 percent-plus of workers earn more than the minimum?
22 My Favorite Min Wage Cartoon
23 The Bottom Line Based on 2016 election, there shouldn t be a threat of a minimum wage hike. But Trump is a less-than-dependable wild card. States will continue boosting wage mandates. As Thomas Jefferson warned, Eternal vigilance is the price of liberty.
24 Conclusion Website: Blog: Policy videos:
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