Wednesday, 25 January 2006
State House Committee Votes To Increase the Minimum Wage
« Governor Fletcher Stands Up to PETA | Main | A Kentucky Right to Work Law Would Create New Jobs »Yesterday the House Labor and Industry Committee passed a measure that would increase the minimum wage from $5.15 an hour to $6.00 an hour and $6.50 an hour the following year. My favorite quote from the article came from Democratic Rep Charles Miller.
"We're talking about something that's important," he said. "I can't understand why anyone would be against raising minimum wage a few cents."
Because unlike you, Rep Miller, those against the raising of the minimum wage actually understand basic economics! Lets review these principles so even Rep Miller can understand them.
Artificially raising the cost of labor for any industry will cause one of two events. The additional costs are passed on the the customer. This will cause the consumer's purchasing power to decrease and force them to buy less goods. This loss in sales will lead to either a loss in jobs or reduce new job creation from lack of capital formation.
If the costs can not be passed onto the consumer because of price competition, then labor will have to either be cut to afford the additional costs or marginal business will be put out of business. Either option will lead to a net loss in jobs.
So knowing that an increase in the minimum wage will lead to a loss in jobs, it becomes very easy to oppose it. Maybe even Rep Miller can understand these basic principles! Although, I won't be holding my breath. Hopefully, this bill will never make it through the state legislature. And if it does, I hope Fletcher will veto it.
