Does business need Wellington to manage wages? That question is powerfully argued in the negative at the Mises Daily (just read "Wellington" for "Washington") in a response to arguments by Clinton's former Labor Secretary Robert Reich in favour of the Democrats' plan to hike the minimum wage by $2.0/hour.
Reich offers all the usual wrong arguments, all soundly dismissed.
- "Businesses can pass the hike along to consumers." Not true. Consumers may simply stop buying the hiked stuff altogether.
- "The minimum wage increase wouldn't be a minimum wage increase ... [since] the new proposed minimum is more like an inflation adjustment than a real increase." Not true: "To "adjust" the regulation for inflation will simply force businesses to lay off some of those marginal workers and to restrict the quality of their products, not to mention hiking prices."
- "The minimum wage increase would actually help small businesses." Yep, Reich even tries that line of 'argument.' The Mises Blog summarises: "First, Reich argued that the minimum wage hike wouldn't hurt businesses because the damage would be passed on to another group. Then, Reich denied that the hike would be a hike. Now, in his third argument, Reich is claiming that the non-hike hike, the harm of which could be shunted to others, is actually not harmful. OK?"
LINK: Does business need Washington to manage wages - Robert Murphy, Mises Daily
RELATED: Minimum Wage, Economics