Interesting interview with a $15 minimum wage activist. This is a great example of how the minimum wage discussion is totally divorced from logic, economics, and value delivery. The activist does not recognize or care that she is imposing costs on owners and customers and that forcing owners to pay more in wages than workers deliver in productivity will result in layoffs or automation. A small group will be better off, but a much larger group will be worse off in terms of higher prices, fewer profits to reinvest in the business, and lost jobs. In economic terms, a 'dead weight loss' results, and total value created is reduced.
I
wish Neil had asked her how they arrived at $15 as the proper minimum
wage. I guarantee she would have answered that is 'fair' or would
provide a 'living wage' - her answer would have nothing to do with
business economics or her delivering $15 worth of productivity.
It's
disappointing that workers are being misled in this way. They are
being told this will be a great catalyst, that their increased spending
power will grow the economy and everyone will benefit. Clearly, that's
not how wages work. If it worked that way, then $15 is way too low - it
should be $100/hour or more. When workers are (over)paid more than
they produce (including higher-paid workers), that inefficiency is a drag on
growth and actually constrains resources that would otherwise be used to
expand business and create more jobs.
All
that has been accomplished here is to make a lucky few low-skilled
workers marginally better off at the expense of their counterparts who
now will be fired, replaced, or unable to take advantage of
opportunities that don't exist because resources were wasted overpaying
the lucky few.
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