Help the poor by destroying jobs

The State News’ position on a minimum wage hike is confusing. You claim “more focus should be put on job creation” rather than raising the minimum which you describe as a temporary solution to poverty. Then you acknowledge the Joint Economic Committee’s briefing that says raising the minimum wage will destroy jobs.

On one hand you claim the solution to poverty is more jobs, yet you advocate a policy that reduces jobs? I’m not sure I see how the poor come out ahead.

Some might dispute the JEC analysis and claim raising the minimum wage doesn’t eliminate jobs. Hold your breath. The basic laws of economics dictate that increasing the price of a good or service reduces the demand for that good or service.

All other things being equal, raising the price of unskilled workers results in less demand for those workers. Of course, all things are never equal so there are other factors. If the economy is growing, the demand for workers will increase. If the supply of workers doesn’t increase as fast as demand, wages rise as employers try to attract them over their competitors. Wages will rise as much as needed to bring the supply in line with the demand. In this manner, the free market sets a “minimum wage” and the government doesn’t need to interfere with this natural process.

[Letter to the Editor - The State News. Published 08/07/2006.]