Thursday, April 17, 2014

Jim and James are clueless.


A recent letter to the editor by Tom Wilson laid out the arguments against a minimum wage hike -- it will cause people to lose jobs and increase costs for everybody. Using the example of a teenager trying to make some money, he argues that we should let the free market work. If the teenager wants to mow your lawn for $20, and it's worth $20 to you for him to do it, you can strike a fair bargain. But if the government says you must pay him $50, you will probably decide that's too much, and you won't get your lawn mowed and the teenager won't make any money. Jim Scoggins and James Alstatt disagree with Tom.

Jim says Tom is insulting because he mistakenly assumes that anyone who is underpaid doesn't already have skills and isn't already looking for a better paying job. That may be, but mowing the lawn is still worth only $20, and paying someone $20 to do it isn't underpaying him. It doesn't matter to me whether a Nobel prize physicist or the little kid down the block mows the yard -- the job is still worth only $20. I'm not going to pay the man with multiple Ph.D's more to cut the grass when my lawn will look just as good if I have the kid down the street do it.

James says that the lawn HAS to be mowed, so not paying $50 to get it done is not an option. He assumes that the home owner won't get out there and mow it himself or get his kid to do it. He says the home owner is too busy at the factory he owns to do it himself. He says that he will have to pony up the $50 which will help the one mowing his yard to buy the widgets he makes at his factory, and he'll have to employ more people to make widgets. James believes paying the lawn mower extra money will increase sales so vastly that everything will be hunky dory. But James forgets that if we have to pay the lawn boy more, by the same law, we also have to pay the factory workers more, and the price of the widgets will increase so that the lawn boy still isn't making enough to buy widgets -- it's called inflation. It's when the price of a product or service rises in relation to wages. If you make $100 more a week, but the cost of living goes up $125, you aren't getting anywhere. Indeed, if the cost of living goes up $125, and you lose your job because the minimum wage priced you out of it, you're fast losing ground.

And that's what happens when the government monkeys around with the free market.

"Not about pocket money . . ."
" . . . It's about the economy." The Dallas Morning News; March 19, 2014; p. 18A.

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