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George Will nails it

Posted By Russ Roberts On January 4, 2007 @ 3:45 pm In Work | Comments Disabled

George Will on the minimum wage [1]:

A federal minimum wage is an idea whose time came in 1938, when
public confidence in markets was at a nadir and the federal
government’s confidence in itself was at an apogee. This, in spite of
the fact that with 19 percent unemployment and the economy contracting
by 6.2 percent in 1938, the New Deal’s frenetic attempts had failed to
end, and perhaps had prolonged, the Depression.

Today, raising
the federal minimum wage is a bad idea whose time has come, for two
reasons, the first of which is that some Democrats have an evidently
incurable disease — New Deal Nostalgia. Witness Nancy Pelosi’s "100
hours" agenda, a genuflection to FDR’s 100 Days. Perhaps this nostalgia
resonates with the 5 percent of Americans who remember the 1930s.

That’s how it opens. The close is better, talking about how it might be a good idea to let state minimum wages vary:

But wait. Ronald Blackwell, the AFL-CIO’s chief economist, tells the
New York Times that state minimum-wage differences entice companies to
shift jobs to lower-wage states. So: States’ rights are bad, after all,
at least concerning — let’s use liberalism’s highest encomium — diversity of economic policies.

The
problem is that demand for almost everything is elastic: When the price
of something goes up, demand for it goes down. Obviously were the
minimum wage to jump to, say, $15 an hour, that would cause significant
unemployment among persons just reaching for the bottom rung of the
ladder of upward mobility. But suppose those scholars are correct who
say that when the minimum wage is low and is increased slowly –
proposed legislation would take it to $7.25 in three steps — the
negative impact on employment is negligible. Still, because there are
large differences among states’ costs of living and the nature of their
economies, Sen. Jim DeMint (R-S.C.) sensibly suggests that each state
be allowed to set a lower minimum.

But the minimum wage should be
the same everywhere: $0. Labor is a commodity; governments make messes
when they decree commodities’ prices. Washington, which has its hands
full delivering the mail and defending the shores, should let the
market do well what Washington does poorly. But that is a good idea
whose time will never come again.

I don’t agree with the last line—I’m an optimist. But my favorite word is in the next to last paragraph—"scholars." Notice that he didn’t say economists. I don’t think it’s a coincidence.

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[1] on the minimum wage: http://www.washingtonpost.com/wp-dyn/content/article/2007/01/03/AR2007010301619.html

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