“God” and the Minimum Wage

God” and the Minimum Wage   by Peter Burrows 11/21/18 elburropete@gmail.com  

New Mexico is now ruled by Democrats, top to bottom, and one of the first things we can expect these Democrats to do is to raise New Mexico’s minimum wage, now at $7.50 per hour, to perhaps as high as $15.  I expect there will be a few stupid Republicans who will go along with this.                                                                                                                                    

Some of you are thinking: “Stupid?! Those are Republicans who CARE Burro, you heartless Libertarian POS.”                                                                                                                         


 OK, let’s think about it for just a second. If passing a minimum wage law could eliminate poverty, why doesn’t old Mexico, for example, enact a $50 per hour minimum wage and then no more poor Mexicans would be trying to illegally enter low-wage America, right?  Hell, Mexico might have to build a wall to keep Americans out.                                                                                                                                  

Does that make sense to you? Of course not. Why, then, do most people support minimum wage laws when only a little reflection would persuade them such laws are foolish? Because most people don’t spend any time thinking about it. They just assume such laws are good. They are wrong.                                                                                                           

There are a number of assumptions inherent in minimum wage laws, none of which are correct.  The first assumption, and this is the biggie, is that Government is God.  Why do I say that? Because minimum wage laws assume that government can eliminate the law of supply and demand.                                                                                                                                    

The law of supply and demand, which could also be called the law of price and demand, says that demand is an inverse function of price, a fancy way of saying that when prices go up, demand goes down, and vice versa. This is a common-sense law of human nature, and no written law is going to repeal it.                                                                 

It is not an iron-clad law, thoughbecause there are circumstances in which demand follows the direction of the price, e.g. when a stock is going up in price, that is frequently a sign to BUY, not sell. The same is true for any market where speculation is a strong force, whether stocks, tulip bulbs or even houses.                                                                                

That is not the case in the market for labor.  There is less demand for labor at $15 an hour than at $7.50 per hour.  Period.  The higher the minimum wage, the greater the unemployment it causes. Yes, there are a few studies that claim that increases in minimum wages do not increase unemployment, but none of those studies involved dramatic increases in the wage rate, and short-term effects of small increases can easily be obscured by other economic trends.                                                                                                       

Most studies show what you would expect: increasing the cost of labor reduces the demand for labor. Just ask yourself, if increasing minimum wages doesn’t influence the demand for labor, why not pass a $50 an hour minimum wage law right here in Grant County?  That would make us all rich, right?  It would also result in an empty parking lot at Walmart.                                                                                                                                                   

Since most Democrats, Progressives and Liberals operate under the illusion, whether they realize it or not, that government is God, we can expect New Mexico to soon be further impoverished by an increase in the minimum wage.     

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