LETTER: Raising minimum wage won’t work; here’s what will
WEST FARGO — Minnesota recently raised its minimum wage to $9.50 by 2016, compared with the federal level of $7.25. Also, President Barack Obama has proposed raising the federal level to $10.10 per hour by 2015.
These policies may have good intentions, but the means and results are a different story.
Take the means. Raising the minimum wage essentially is another form of wealth redistribution, something which Obama clearly indicated was his intention during his 2008 campaign.
And in order to redistribute wealth, you first must take the wealth from someone, using force if necessary.
Next, take the results. The minimum wage comes down to simple economics: When you raise the price of something, the demand for it goes down. Therefore, when you raise the price of labor by raising the minimum wage, the demand for labor goes down. That means employers will let employees go or raise prices.
In the end, it is the poor, the middle class and small businesses who suffer from fewer jobs and higher prices.
The Congressional Budget Office estimates that an increase to $10.10 an hour would result in a loss of 500,000 jobs. So, is it better to earn $7.25 before a minimum-wage hike or $0 after?
In essence, the very people whom proponents of a minimum wage increase are trying to help wind up suffering the most. And so we have a negative result stemming from a positive intention, which is frequently the case when the government intervention in a free-market economy.
The minimum wage increase in Minnesota assuredly will result in more jobs swimming across the river into North Dakota, the modern-day model for economic opportunity in the United States. The solution is to ease the burden of government regulation on businesses so they can expand, leading to more jobs and higher pay.
Raising the minimum wage is minimum thinking. Let’s think bigger.