Letter to the Editor

Minimum wage just a convenient scapegoat

Friday, March 8, 2013

To the Editor:

A recent Sheldon Richman op-ed argued that the poor would be better off if the minimum wage was eliminated. That argument is disingenuous rubbish.

First, Richman says "empirical observation tells us that an enforced minimum wage destroys jobs, degrades the quality of other jobs, and prevents new jobs from being created."

That statement is false. Empirically, studies on the minimum wage and unemployment are all over the place, but the overall conclusion of a study of minimum wage studies is that raising the minimum wage does not increase unemployment.

Richman then says, "Advocates of the minimum wage ought to explain why they believe competition among employers hasn't already bid up the wages of unskilled workers to reflect their productivity."

That's easy. There is an excess supply of labor. Hence, wages would not be bid up to reflect worker productivity but bid down to reflect that excess labor supply. And that is why Richman's article is complete hogwash. Worker productivity has been steadily going up for the last 30 years but worker wages have stagnated -- they haven't been bid up to reflect their productivity. Instead, the profits from that increased productivity have gone exclusively to the owners in the economy to the detriment of workers.

Richman then implies that jobs such as theater ushers were eliminated because of a rising minimum wage. Untrue again. The wage has not risen. Adjusted for inflation (1996 dollars), the minimum wage never dipped below $5.30 per hour from 1956 to 1982. Since 1982 it has never been above $5.30 per hour. Those jobs were eliminated in the name of efficiency with the minimum wage being made a convenient scapegoat.

Finally, Richman ludicrously claims that when there is no minimum wage employers have to treat their workers better. This too is based on the false assumption that a minimum wage increases unemployment. But it also flies in the face of what we know about third world countries.

When there are labor surpluses and no regulations to protect workers, wages and working conditions deteriorate to unconscionable levels.

Richman's editorial is just an example of the supply side economics delusion. The real reason the Richman's of the world want to reduce wages is to increase profits for the owners.

Magically, those profits are supposed to trickle down. They don't. Instead, workers make too little to buy the goods that businesses produce. This forces businesses to cut wages, lay off workers or move production overseas so they can reduce prices for their goods while maintaining their profits. But with even lower wages soon those goods are out of reach too.

This process results in a death spiral to a third world society where there is an extreme concentration of wealth, a small professional middle class, and everybody else is impoverished.

The best economic system is capitalism plus regulations created by a government working in the public interest to constrain capitalism's excesses. A decent minimum wage is one of those regulations.

Bruce Sanders