In a letter published Jan. 23, Doug Moore argued the minimum wage should be raised because people making $7.25 an hour are not able to survive at that wage, and they will have to turn to the government for assistance. He also wrote we should not subsidize corporate profits at the expense of their employees and the national debt, because it is immoral and it is bad business.
His idea seems to be that we can reduce the level of government assistance to the working poor by making employers pay more. It would be more immoral, in his view, to shift this welfare burden from taxpayers to employers. Presumably because employers who hire people at $7.25 are, well, evil.
Who are the workers who make the minimum wage? It looks like a lot of them are teenagers who come from middle-class families. To the extent that an increase in the minimum wage is supposed to reduce welfare burdens on the public, it would seem to be something of a blunt instrument, because it would increase the pay of many people from middle-class families. If we want to do more for the working poor, it might make more sense to tinker with the Earned Income Tax Credit.
But if we want to do something significant on the minimum wage front, maybe we should require employers to pay $50 an hour. If a part-time employee who works 25 hours a week made that much an hour, he or she would have gross pay of $1,250 a week. Or $65,000 a year. Pretty good. Except that, at some level, increases in the minimum wage are going to cause some employers to go out of business or to automate functions that used to be performed by lower-paid workers. That would make it harder for people with the weakest skills to get jobs.
Some people think that work is morally good. From that perspective, it could be immoral to introduce policies that reduce work opportunities.
One of the problems with tinkering with the minimum wage is it assumes the government knows what it is doing when it gets involved in market pricing. If a $50 minimum wage is too extreme, how about a $10 minimum wage instead?
The government might be good at doing some things, but price-setting in a complex market like the labor market may not be one of them.