Superb Argument Against a Federal Mininum Wage
Over at the Cato-at-Liberty blog Stephen Slivinski does a fine job of articulating why setting minimum wage at the federal level is such a bad idea.
Now consider what might happen if Congress were required to adjust the federal minimum wage by the cost of living in each congressional district. In areas where the cost-of-living is close to the national average, the minimum wage would be around $7.25. In Manhattan – where it costs twice as much to live when compared to other areas, like Kansas City – the minimum wage would be at least $14.
From the political perspective of a legislator in a big city this is a political win-win. The politician gets to use minimum wage as a way to excite his base while not incurring the wrath of local business because average city pay is will beyond the hike. In this example we see how a federal mandate frees a politician from the accountability needed to keep his political power in check. This is precisely why I advocate for smaller government. By consolidating power, you make those that wield it less accountable to those that grant it.
January 12th, 2007 at 9:53 am
One thing I’ve been wondering about: do people making minmum wage pay any taxes at all? I’d rather see tax breaks than hikes in the minimum wage; it seems like it wouldn’t cost the government very much, since few people make minimum wage anyway.
January 12th, 2007 at 11:49 am
A large chunk of those working for minimum wage are teenagers working part time jobs. They are taxed but their parents probably get a tax break for having a dependent.
Of course you’re only interested in giving a tax break to poor people making minimum wage. If we assume the existence of an actual poor person unable to get a better paying job than one that pays minimum wage then they would make $8000 a year working full time. This places them in the 10% federal tax bracket.
I fully support the elimination of this tax instead of arbitrarily increasing the value of unskilled labor. To offset the income loss would you propose an increase in the tax for all other brackets or do you favor the elimination of some federal programs? I favor the elimination of federal programs. Making government smaller on both ends is always a win-win.
January 13th, 2007 at 1:59 am
how about you remove the employer’s side of the taxes. Right now, i think for social security, the government demands that the employer also pay a tax on the employee’s income. Guess what? this means the employee gets less money. Effectively, the employee is the one getting taxed. So how about they get rid of all taxes of that nature so that everyone can see on their paychecks just how much they’re actually getting taxed.
January 15th, 2007 at 6:11 pm
The problem with cutting the employer benefits for peole hiring minimum wage employees is that it encourages employers to only pay minimum wage. But, maybe there’s some way that could be worked out.
As for where the money would come from, I’d have to see how much money the government actually gets from people making minimum wage- I suspect it’s very little. But, considering that the national debt is currently at over 8.5 trillion dollars, I’m not sure that there’s always going to be a 1:1 matchup between cutting federal uncome and cutting federal expenses.
Not that I’m advocating reckless spending, I’m just saying that balancing the budget is a HUGE seperate issue, which I doubt this particular debate would have much of an effect on.
January 16th, 2007 at 4:06 pm
So then your not going to answer my question. Okay.
January 17th, 2007 at 11:09 am
Damn, how dare I undermine your false dichotomy. I’m totally not following the rules.
January 17th, 2007 at 11:45 am
Curious, how is my dichtomy false?