We’ll try to sort some of this out during our radio program.
The two sides of the debate over whether to increase the federal minimum wage couldn’t be further apart.
One side claims that an increase is long overdue and will cure poverty, end homelessness and promote social mobility, all at once.
The other side argues that raising the minimum wage will bankrupt every small business in America and the price of a “Big Mac” will triple overnight.
I think I can sort through all this overblown rhetoric and provide you with some information that’s actually useful and may help you decide how you feel about this question.
Before we start, you need to know the idea of a minimum wage isn’t a new one. And we have a lot of experience to guide us.
About 90% of the world’s countries require some level of a minimum wage always be paid. New Zealand was the first to adopt a minimum wage in 1894. And the United States caught up 76 years ago, adopting a federally-mandated minimum wage in 1938.
As you listen to what I’ve got to say about the minimum wage (which should be easier on your ears than the pettifoggery currently polluting the airwaves), remember the sage advice left for us by the late Senator Daniel Patrick Moynihan, “Correlation does not imply causation.”
Labor markets, business and consumer decision-making and business cycles are complex and not well understood, academician’s claims to the contrary. And also contrarily, the relative amount of the minimum wage is a microscopic and minimally relevant part of the processes of producing, distributing, selling and purchasing goods and services.
Finally – and I know you can’t wait to get to the Podcast – don’t lose your policy-making perspective as you sort all this out. Policy-making based on economic principles is one thing and policy-making based on politics and principles of equity and social justice is something completely different. And the overlap between them, particularly when it comes to debating the minimum wage, isn’t very much.