Seems Cruel

by Don Boudreaux on December 1, 2009

in Myths and Fallacies, Prices, Reality Is Not Optional, Work

Here’s a letter that I sent yesterday to the New York Times:

Pleading for government to address today’s unemployment problem more vigorously, Paul Krugman writes that “The long-term unemployed can lose their skills, and even when the economy recovers they tend to have difficulty finding a job, because they’re regarded as poor risks by potential employers” (“The Jobs Imperative,” Nov. 30).

I’m confused.  Because Mr. Krugman here seems to understand that low-skilled workers produce less value per hour for their employers than do higher-skilled workers (or than does capital equipment that substitutes for low-skilled workers) – and because he recognizes that employers can get by profitably without hiring low-skilled workers – why does he, in other columns, support a higher minimum-wage?

Why does Mr. Krugman advocate policies that raise employers’ costs of hiring workers who, as he himself describes them, are “regarded as poor risks by potential employers”?

Donald J. Boudreaux


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