Wednesday, September 2, 2009
Peter Schiff: Raising the Minimum Wage is Stupid
Peter Schiff slams calls to raise the minimum wage in this insightful article. You might point out that raising the minimum wage raises the income of many people who are currently making minimum wage. Remember, however, that there are many other effects - unseen effects - of raising the minimum wage. An employer will likely lay off his weakest performing workers. If the minimum wage is raised 10%, he may lay off as much as 10% of his workforce to maintain profitability (maintaining profitability is a prerequisite for maintaining the jobs of the other 90% that didn't get laid off). For those who were looking for jobs, more employers are now laying off instead of hiring. If you didn't have a job when the minimum wage got increased, finding one just became that much more difficult. So, while it is true that minimum wage earners benefit by an increase in the minimum wage, this comes at the cost of job losses among the presently employed and a decrease in the prospects that the presently unemployed will be able to find employment. Sure, there are benefits, but do the benefits outweigh the costs?