The minimum wage not only discriminates against low-skilled workers but also is one of the most effective tools of racists everywhere. Our nation's first minimum wage came in the form of the Davis-Bacon Act of 1931. The goal was to protect white construction workers from the north from black construction workers from the south. Davis Bacon continues to be a way to dicriminate in favor of unions and against lower paid non-union workers.
Minimum wage laws generally discriminate against low-skilled workers and entry level workers in all industries. In an aricle today Walter Williams writes;
"Let's work through an example. Suppose 100 yards of fence could be built using one of two techniques. You could hire three low-skilled workers for $15 each, or you could hire one high-skilled worker for $40. Either way, you get the same 100 yards of fence built. If you sought maximum profits, which production technique would you employ? I'm guessing that you'd hire one high-skilled worker and pay him $40 rather than hire three low-skilled workers for $15 each. Your labor costs would be $40 rather than $45.
Suppose the high-skilled worker came into your office and demanded $55 a day. What would be your response? You'd probably tell him to go play in the traffic and hire the three low-skilled workers. After all, hiring the three low-skilled workers for $45, to get the same 100 yards of fence, would be cheaper than the $55 a day now demanded by the high-skilled worker."
It is easy to see in this simple example how a rise in minimum wage will affect low skilled workers. As entry level or low skilled workers get a 24% pay raise as president Obama wants then higher level employees must also get a raise thus ratcheting up all wages. An emplyer can only stand a certain level of increased costs before he must 1) raise his prices (not always possible) or 2) lay off workers and expect higher productivity from those workers left. if he can't raise prices and can't increase productivity the options are 1) go out of business 2) go out of business.
Whether support for minimum wages is motivated by good or by evil, its effect is to cut off the bottom rungs of the economic ladder for the most disadvantaged worker and lower the cost of discrimination. President Obama has no understanding of basic economics and thus has no idea what his minimum wage proposal can mean.
Minimum wage laws generally discriminate against low-skilled workers and entry level workers in all industries. In an aricle today Walter Williams writes;
"Let's work through an example. Suppose 100 yards of fence could be built using one of two techniques. You could hire three low-skilled workers for $15 each, or you could hire one high-skilled worker for $40. Either way, you get the same 100 yards of fence built. If you sought maximum profits, which production technique would you employ? I'm guessing that you'd hire one high-skilled worker and pay him $40 rather than hire three low-skilled workers for $15 each. Your labor costs would be $40 rather than $45.
Suppose the high-skilled worker came into your office and demanded $55 a day. What would be your response? You'd probably tell him to go play in the traffic and hire the three low-skilled workers. After all, hiring the three low-skilled workers for $45, to get the same 100 yards of fence, would be cheaper than the $55 a day now demanded by the high-skilled worker."
It is easy to see in this simple example how a rise in minimum wage will affect low skilled workers. As entry level or low skilled workers get a 24% pay raise as president Obama wants then higher level employees must also get a raise thus ratcheting up all wages. An emplyer can only stand a certain level of increased costs before he must 1) raise his prices (not always possible) or 2) lay off workers and expect higher productivity from those workers left. if he can't raise prices and can't increase productivity the options are 1) go out of business 2) go out of business.
Whether support for minimum wages is motivated by good or by evil, its effect is to cut off the bottom rungs of the economic ladder for the most disadvantaged worker and lower the cost of discrimination. President Obama has no understanding of basic economics and thus has no idea what his minimum wage proposal can mean.
