Hendricks County Flyer, Avon, IN

Commentary

March 3, 2014

Benefits of hiking minimum wage are just an illusion

I don’t know anyone averse to making more money. Sure, I have friends who demonstrate, through words and actions, that money is not the most important thing in their lives. But I haven’t seen one of them turn down a raise.

I wouldn’t, either. (That's just a gentle hint to any employer who wants to heed President Obama’s call to inject more money into the economy by giving some of it to me. I promise to spend it, not save it, because saving is what hurts everybody but the rich.)

Still, I have a hard time believing that if government once again invades the marketplace and declares that nobody can be paid less than $10, $12, $15 per hour — whatever — the economy will rebound, inequality will decline, employment will increase, and happy days, or at least happier ones, will be here again. If only.

Yes, I’ve heard the pundits who say that putting more money into the pockets of the poor will juice the economy, since they’ll spend it right away, raising demand for products. Factories will ramp up inventories, more people will be hired, and the Great Recession will be a distant memory.

I’ve heard them declare with unshakeable confidence that it will increase the incentives for the unemployed to work because all of a sudden they will be able to make more by getting a job than by collecting government benefits.

I’ve been told that raising the entry cost of labor by 20 to 40 percent will have no impact — none — on hiring decisions or the number of hours that employees work.

In short, it will be like magic, having only positive effects and no unintended consequences. Companies won’t notice a drain of $150 billion to $175 billion on their bottom lines, and they won’t try to offset it in ways that might hurt the poor. Hey, it might even allow taxes to be cut (try not to laugh at that one) because millions of people will no longer need government subsidies to pay for their food, rent, clothing and other basics.

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