Henderson on the Minimum Wage

by Don Boudreaux on August 1, 2006

in Myths and Fallacies, Prices, Regulation, Work

Economist David Henderson packs a lot of argument and evidence into this essay that appears in today’s Wall Street Journal.  David reviews the powerful reasons why legislating a "minimum wage" is unsound public policy masquerading as compassion.

I especially like David’s summary of one of the (many) criticisms of the (in)famous 1994 study by David Card and Alan Krueger — a study purportedly finding that raising the minimum wage might actually increase employment of low-skilled workers:

As Donald Deere and Finis Welch of Texas A&M University, and Kevin
M. Murphy of the University of Chicago, pointed out, an increased
minimum wage help expand jobs at franchised fast-food outlets by
hobbling competition from local pizza places and sandwich shops. This
could explain, in fact, why Messrs. Card and Krueger found fast food
prices rising more quickly in New Jersey than in Pennsylvania, a fact
that they were unable to explain.

Be Sociable, Share!

Comments

comments

12 comments    Share Share    Print    Email

{ 6 comments }

joe August 1, 2006 at 12:52 pm

Americans With No Abilities Act

WASHINGTON , DC

Congress is considering sweeping legislation, which provides new benefits for many Americans.

The Americans With No Abilities Act (AWNAA) is being hailed as a major legislation by advocates of the millions of Americans who lack any real skills or ambition.

"Roughly 50 percent of Americans do not possess the competence and drive necessary to carve out a meaningful role for themselves in society," said Barbara Boxer. "We can no longer stand by and allow People of Inability to be ridiculed and passed over. With this legislation, employers will no longer be able to grant special favors to a small group of workers, simply because they do a better job, or have some idea of what they are doing."

The President pointed to the success of the US Postal Service, which has a long-standing policy of providing opportunity without regard to performance. Approximately 74 percent of postal employees lack job skills, making this agency the single largest US employer of Persons of Inability.

Private sector industries with good records of nondiscrimination against the Inept include retail sales (72%), the airline industry (68%) ,and home improvement "warehouse" stores (65%) The DMV also has a great record of hiring Persons of Inability. (63%).

Under the Americans With No Abilities Act, more than 25 million "middle man" positions will be created, with important-sounding titles but little real responsibility, thus providing an illusory sense of purpose and performance.

Mandatory non-performance-based raises and promotions will be given, to guarantee upward mobility for even the most unremarkable employees.

The legislation provides substantial tax breaks to corporations which maintain a significant level of Persons of Inability in middle positions, and gives a tax credit to small and medium businesses that agree to hire one clueless worker for every two talented hires.

Finally, the AWNA ACT contains tough new measures to make it more difficult to discriminate against the Non-abled, banning discriminatory interview questions such as "Do you have any goals for the future?" or "Do you have any skills or experience which relate to this job?"

"As a Non-abled person, I can't be expected to keep up with people who have something going for them," said Mary Lou Gertz, who lost her position as a lug-nut twister at the GM plant in Flint, MI due to her lack of notable job skills. "This new law should really help people like me." With the passage of this bill, Gertz and millions of other untalented citizens can finally see a light at the end of the tunnel.

Said Senator Ted Kennedy, "It is our duty as lawmakers to provide each and every American citizen, regardless of his or her adequacy, with some sort of space to take up in this great nation."

Joe Schon August 1, 2006 at 3:29 pm

Resource crunches are real and the likes of kudlow fail to understand

http://www.theviewfromthepeak.net

Noah Yetter August 1, 2006 at 5:54 pm

"Resource crunches are real and the likes of kudlow fail to understand

http://www.theviewfromthepeak.net"

Not only bad science and worse economics, but posted on the wrong story to boot!

As we say on the internet, GG

Ryan Fuller August 2, 2006 at 1:19 am

"As we say on the internet, GG"
Indeed. Owned. :)

By the way, joe… if you're going to copy an article directly from The Onion, at least mention the source.

Re: the Card and Krueger study, I'd like to ask them, "If a study showed that the demand curve slopes upwards, would you believe it?"

John Dewey August 4, 2006 at 9:50 am

The new Chicago minimum wage has caused Target to cancel a project:

http://tinyurl.com/o5crp

Dawna Dale December 16, 2007 at 3:14 am

capra elephantiac obliterable unpacable terephthalate fastidium slight acerra
Delaware State Bar Association
http://ic.net/~erasmus/RAZ513.HTM

Previous post:

Next post: