11 February 2007

minimum wage

i've posted some little things on the minimum wage hike here and there, displaying my obvious dislike of the thing. i think it's the policy equivalent of using a chainsaw to perform a coronary bypass. it is woefully inadequate in targeting the underclass in that it focuses on those earning minimum wage rather than on households below the poverty line.

something more akin to the earned income tax credit, that targets households by tax return, is a much better scheme for addressing low income. a teenager in a wealthy household earning minimum wage does not need a pay raise since they are not the main earner in the family. a single mother working two minimum wage jobs is much more likely to need the financial assistance. the older someone is while still earning a minimum wage, the less likely they are to earn meaningful pay raises. it's likely a matter of missing skills or some similar handicap, something that may keep them entirely out of the job market should the minimum wage exceed their employment value.

the unintended consequence i see is the loss of hours or income of some because of the increased costs of payroll to companies that pay the lowest wages. an article from Arizona points out the losses suffered by teenage workers already. since teenagers have other means of support, i suppose it's not earth shattering. i would be more worried about what happens to those who really need the income and have no other options.

but i wonder why the minimum wage was not hiked to, say, $20 per hour. if $7 or $8 per hour is better, why isn't $20 even better? there is obviously some sort of economic force at work that adherents prefer to ignore. rather, they (in fact, everyone on every side) grab on to easy sound bites to hurl at each other in a polemical war of rhetoric rather than deal with underlying issues and quantifiable results of programs.


  1. I dislike constant mucking with the tax code to attempt social engineering.

  2. are you quoting me? i won't say mucking with the tax code is a good thing, but i will admit it's better than a general minimum wage increase. i'd prefer to dissociate handouts from the tax code. i'd prefer programs that can be measured for efficacy.

  3. Isn't giving people tax breaks like saying "we're going to steal less from you, so be happy about it"? Doesn't sounds like a way to fix our socio-economic problems.

  4. ok. i guess i didn't word this post well enough. i am not advocating monkeying with the tax system. i am simply stating that a targeted solution will yield better results with fewer unintended consequences.