All minimum wage laws are bad economics, but Seattle’s new law adds its own potentially unconstitutional twist: harsher terms for out-of-state businesses [Ilya Shapiro and Jayme Weber, Cato]
All minimum wage laws are bad economics, but Seattle’s new law adds its own potentially unconstitutional twist: harsher terms for out-of-state businesses [Ilya Shapiro and Jayme Weber, Cato]
5 Comments
So, help me out here smart guy lawyers….
Where is it that cities have been granted power to regulate wages at all? Where has this power been surrendered to cities?
Municipalities are creatures of state law. Talk to your state legislature as they are responsible for any limits on municipal police power (or lack there of).
“All minimum wage laws are bad economics.” As my daughter’s kindergarten teacher would ask: “Is that a fact or your opinion?”
Minimum wage laws are bad economics. Not an opinion. When they work to raise wages, they lower production and consumption, and destroy economic value. No economic theory supports the idea that such laws increase output, consumption or employment. Economists who support such laws think the benefits to some outweigh the costs to others, or they support what they believe is a more just society, not that the economics is good.
I disagree. Minimum wage laws are a boon to society as a whole. They are way to redistribute resources and they make the pie bigger for everyone, including those at the top. With a minimum wage, the people at the bottom of the ladder can afford to buy things made by people paid with the capital provided by those nearer to the top of the ladder. Those at the top of the ladder reap the rewards. Of course, this only works with inflation, as the price of things has to keep going up. The key is to somehow keep inflation down.
Not having a minimum wage causes stagnation in the economy because it tends to strangle the middle class, leaving the economy with an upper class and an lower class, with nothing in between. For sure, those at the top of the economic ladder can squeeze profits from the underpaid workers, but it is a death spiral to an unworkable society.
One of the main problems in the last 40 years is the destruction of the middle class. This is because manufacturing jobs have gone out of the country as the result of trade agreements. This, in and of itself is not a bad thing. What is bad is that we have not created jobs to replace those lost to countries with a competitive advantage.