Wed 21 Jun 2006
Noticed something in this article about legislation to increase the minimum wage failing:
[Senator Ted Kennedy’s] proposal would have increased the minimum wage to $5.85 beginning 60 days after the legislation was enacted; to $6.55 one year later; and to $7.25 a year after that. He said inflation has eroded the value of the current $5.15 minimum wage by 20 percent (emphasis mine).
This reminded me of a thought I’d had awhile back about the idea of a wage floor, figure I’d share it with you:
Out of curiousity, & with the knowledge that the dollar isn’t worth what it used to be, I consulted an inflation calculator — specifically the one on the Bureau of Labor Statistics site. Took the current minimum wage & put it in the top box w/ the current year, set the bottom year to 1956 — figured 50 years would be a nice round figure — and hit “calculate”. Turns out, that current $5.15 only has the buying power of 69 cents in ‘56 bills. Ironically, the actual minimum wage in that year was a dollar…
When advocates of the minimum wage mention inflation, they have a point. They also whistle past a huge loophole in their arguement: that pesky wage floor doesn’t seem to want to stay still. Because of central bank manipulation (when we do what they do it’s called “counterfeiting”) & the adjustments the private sector has to make to keep up (what keynesians mistakenly call “cost-push inflation”), you almost don’t have the chance to spend that increase before it becomes irrelevant. For that reason, IMO, regardless of whatever one may think of a minimum wage in and of itself (I personally find its relevance overstated, & I will never forgive it for being the excuse used for white employers to pass over & fire blacks in the FDR era), it is self-defeating to have one under a fiat currency.
Any “progressives” out there, if you’re going to defend a wage floor then at least make sure it’s a floor & not quicksand.
July 2nd, 2006 at 3:23 pm
Quite surprisingly, libertarian economist Steve Landsburg argues quite convincingly that more and more empirical evidence tends to indicate that the minimum wage is not the big job killer that most economists believe it to be. Nonetheless, expanding the Earned Income Tax Credit is a much more effective and equitable way of helping the working poor than raising the minimum wage.
July 6th, 2006 at 11:21 pm
I’ve suspected that for the longest but kept getting conflicting info. Somehow I missed that article, thanks for the link.
The use of it as arguement to fire unskilled minorities is backed up by history, taking that beyond racial factors always struck me more as fuzzy. What I’m saying here is that if you generally side with things like that then ignoring fiat money is nuts — “running up the down escalator” an’ all that.