Plenty of politicians, pundits, and preachers are applauding today's hike in the national minimum-wage from $6.55 per hour to $7.25 per hour. Too few pause to ponder the fact that this hike means that Uncle Sam has arbitrarily raised the hourly cost of employing low-skilled workers by 10.7 percent — a policy move always unwise, but especially regrettable when unemployment is rising.
Each semester I ask my
principles-of-economics students if they think that I would rejoice if
Uncle Sam passed a minimum-salary statute for economists, mandating
that every economist employed be paid at least $300,000 annually. (I would, of course, very much love to earn this much money annually by teaching economics.) I then
explain that my more talented and accomplished colleagues, such as
Tyler Cowen and Walter Williams, would surely
benefit from such a mandate. I, in contrast, would lose my job.
For those of you who will accuse me of being a benighted ideologue on this topic, I refer you to this post from June 2006.