Tuesday, February 7, 2012

Madness: Former Obama Adviser Calls for Hike in Minimum Wage

As if there wasn't enough unemployment in the country, Jared Bernstein, wh was the Chief Economist and Economic Adviser to Vice President Joe Biden, executive director of the White House Task Force on the Middle Class, and a member of President Obama’s economic team, is calling for a hike in the minimum wage from it's current federal level of $7.25 to the $9.00 to $10.00 range.

Here's Milton Friedman on minimum wage laws:

Here's what Bernstein wrote today under the headline, The Minimum Wage: Time to Start Working On the Next Increase
I’ve always thought the national minimum wage is a lot more important than most people tend to think. By definition, it sets a floor on the low end of the job market, though to their credit, many states now set their minimums above the federal level of $7.25 (Washington state clocks in at a cool $9.04). So it’s a floor, not a ceiling...

Of course, when someone raises the idea of a raise, you hear a huge outcry from some in the business lobby. Their generic argument is that the increase will lead to job losses among those low-wage workers affected by the higher wage level. Such workers, they say, will now be “priced out of the labor market.”

Yet, you hear the opposite from groups that represent low-wage workers interests, groups like the National Employment Law Project, or NELP (proud disclosure: I’m on their board).
So rather than arguing the theoretical about the minimum wage, like Friedman does, Bernstein tells us it is a good idea because the NELP is for it. Aside from Bernstein, who else is on the NELP Board of Directors?

Elaise L. Fox
President, United Food and Commercial Workers, AFL-CIO, Local 1657
Birmingham, Alabama

Lilia Garcia-Brower
Executive Director, Maintenance Cooperation Trust Fund
Los Angeles, CA

Jonathan Hiatt, Esq.
Chief of Staff and Executive Assistant to the President, AFL-CIO
Washington, D.C.

Just like Friedman stated decades ago, the advocates of the minimum wage are the unions. The unions get their strength from keeping low wage competitors unemployed. The minimum wage is a good way to do that.

Bottom line: Bernstein is either clueless that supply and demand sets the price for wages, as it does for all prices, or he is an evil bastard in favor of distorting the economy by keeping low skilled out of the jobs markets via a high minimum wage that benefits no one but his crony union buddies.


  1. I'm going with evil bastard, Bob.

  2. Well those left unemployed by high union wages receive generous unemployment benefits, paid for by high taxes on those wages.

    Completely logical bizarro-economics.

  3. I always think that if minimum wage laws actually worked, then why not just make it $40 or $50 per hour. Lots more shopping that way!

  4. The minimum wage problem is one of simple mathematics that Keynesians and liberals cannot solve. How is it that Keynsians claim the power to accurately model our economy but cannot do simple addition and subtraction? I dare not ask why liberals cannot figure this out. The answer is simple; they think with their hearts and not with their heads.

    Tim builds chairs for a living. He currently builds $8.25 worth of chairs per hour. He is paid $7.25 an hour. His employer earns $1 profit for every hour Tim works.

    On Friday the Congress passes a new minimum wage of $9.25. Unfortunately, Congress cannot legislate Tim's labor to be more productive. He shows up to work on Monday and still builds $8.25 worth of chairs per hour, but is paid $9.25 an hour. His employer now loses $1 per hour that Tim works.

    How long will Tim keep his job now that he loses his employer money?

    Oh wait, this example I gave is just "theoretical" and pricing Tim out of the labor market was just imaginary. Bernstein and the NELP claim this never happens.

    Don't ever look at real world problems like what we did to American Samoa.

    Don't look at what has happened to black teen unemployment. It was lower than white teen unemployment in the 1940s. Today black teen unemployment is over 47%. White teen unemployment is around 25%.

    Hmm... blacks teens go to GOVERNMENT ran inner city schools. They get the worst education. Their skills are minimal. It must be the increased racism in America since 1940 (sarcasm if you cannot tell)

    No no no. Ignore all that.

    Why is Bernstein and the NELP so stingy? $9 minimum wage? Why not $20? Why not $50?

  5. Eh, I think he's just one of those weasels that think they can repeal certain basic laws by decree.

  6. Correct me if I am wrong. Is that Bob Schieffer in that video? The same guy that was so rude to Ron Paul a few months back.

  7. Pfffttt $9.00 to $10.00 range. What an amateur. If he really wants to help people it should be no less than $100.00.

  8. Why not skip all this minimum wage nonsense and have the FED print a ton of money and give all americans 1 billion dollar each. Now that way everyone would be rich and no one would have to work!

    1. They've already done that to the tune of $5Trillion.

  9. For commenters on a libertarian blog, there sure are a lot of people who advocate really high minimum wages... :\

  10. Cut out all this theoretical nonsense & look at reality. Australia has a federal minimum wage around $18 per hour ($AUS above par with $US). There is very nearly full employment. Most workers live the life style that used to be reserved only for the middle-class. There is little private debt, full free medical coverage, no student debt & everyone pays into a personal retirement plan.
    High wages put money into circulation that benefits everyone (except greedy bosses). All Bernanke has done is put money into bankers' pockets & their friends, the financial speculators.

    1. That's because they actually take advantage of their natural resources in Australia and don't fight nearly as much about the environment as we do in this country. If we took advantage of all of our vast natural resources we would have many more higher paying jobs and the other jobs would end up being at slightly higher rates as well due to higher demand!

    2. Why not increase it to $25 or $250 and see what happens?

      If what happens is unemployment it's not that theory is "nonsense" it's that there are other factors in play in Australia and you are confusing correlation with causation.

    3. Australia has a 48% tax rate and does not have an excessive rate of immigration like the USA. They have a very effective 'moat'.

  11. The problem with $7.25/ hour mininum wage is that one cannot live on that amount. Normally, workers at this rate cannot get even 40 hours per week - as for unemployment payments, these low wage earners rarely are able to collect unemployment benefits because their jobs are frequently temporary, they get laid-off often and it difficult for them to even get a job let alone get unemployment benefits when their job gradually results in fewer and fewer hours each week.
    In fact two wage owners making $10.00 each per hour have great difficulty raising a family because of the expenses related to having a job such as a car or two, maintenance, plus gas and oil. Then there is rent, food, water, sewer, electricity, heating and health care - it may not be impossible, but it is tough.

  12. They need to raise it to keep up with their irresponsible inflationary monetary policy, lest they isolate and hurt their most likely voting block - bastards; they should all be in a jail somewhere...

  13. You pose an interesting argument. Just what do all these Aussies do for their $18 AUS/hour? I suspect many of them are employed in the Australian resource industries, which compose the bulk of Australia's national and international commerce. One assumes that productivity in that arena is adequate to overcome their labor cost.

    Now, just what do you suppose all those unemployed black and white teens, as well as the remainder of the total 7 million unemployed will do in America to earn their $18 USD/hour? If the industry is not there to support them at $7.25/hour, how do you suppose it will be there when their labor cost is now 2.5 times greater? And that just goes for the currently unemployed. If you raise all labor costs to a floor of something like the Aussies' $18/hour, what happens to all the other export driven industries in America? In most industries where low cost labor is employed, there isn't much room for productivity growth unless technology is used to replace the cheap labor. That movement has already destroyed thousands of jobs. Of the jobs that remain, all you accomplish with a big increase in marginal labor costs is to drive those jobs someplace else.

    1. When was the last time you saw a full service gas pump? How does that correlate temporally with the change in minimum wage?