Free Markets, Free People

The downside of central planning – minimum wage version

Nothing new here, but let’s repeat it for the umpteenth time so perhaps somewhere some lefty will actually figure out why minimum wages are a bad idea:

One of the results of the state and local minimum wage increases across the country is more young people out of work, according to Puzder. The more entry-level jobs pay, the more willing experienced, qualified workers will be to take them, thereby bumping the young and inexperienced out of the work force. Puzder says that is causing a real problem for the young people of America.

“The real problem with youth is: You have to have these entry-level jobs to get the experience you need to move forward in your life. If they don’t have those jobs, they’re sitting at home – I don’t know – looking at the posters from the last election or waiting for mom to make dinner, as opposed to being out there actually working and getting the experience that they need to go forward in life,” argues Puzder. “The experience is the important part and we’ve got a whole generation of kids ages 16 to 29 who are missing out on that.”

So how does the economy regulate the price of labor?

“When there’s a demand for labor, the cost of labor goes up. When there’s no demand for labor, it goes down and you can’t solve that problem by having the government artificially mandate a wage increase when there’s no economic growth to support that,” says Puzder. “What businesses do is they increase their prices and they move to automation so you have less jobs.”

Yes, as usual, central planning will fail and have negative consequences.  I know, you’re shocked.

Oh, and this:

“When politicians tell people, ‘We’re going to increase the minimum wage and your check will be bigger,’ what they don’t say and [what] the next sentence should be [is]: ‘However, it’s not going to be worth as much as the increase, because everybody’s going to increase their prices so you’re not going to be able to buy as much as you could have if we’d just had economic growth that justified that increase.”

So what does Andy Puzder propose instead of artificially inflated minimum wages? “Government needs to get out of the way. If government gets out of the way, businesses will create jobs,” he says. “Wages will go up and the country will go back to a state of prosperity instead of what we’re in now.”

So you get the usual self-serving half-truth from pols when they claim they’re doing something to help the “little people”. By the way, Andy Puzder is the CEO of CKE Restaurants.  He and I disagree on one thing:

Puzder says he believes states and municipalities have the right to raise the minimum wage, but he believes people need to understand the consequences, including higher prices and increased automation, which his company is undertaking using iPads to take orders at some restaurants instead of people.

Uh, no, Mr. Puzder … states have the power to raise the minimum wage, but unless you believe some entity other than yourself has a “right” to mandate how you spend your labor dollar, they have no “right”.

Anyway, prepare for some lefty to come by and assure us that the laws of economics aren’t really iron-clad at all, that supply and demand regulated by the market is old thinking and that central planning has a much better chance of assuring a “living wage” … if, given their skills, anyone can find a job at that price.


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13 Responses to The downside of central planning – minimum wage version

  • I find it fascinating that the Swiss have NO minimum wage.  Their streets must be littered with the rotting carcasses of the famished…  So inhumane.
    Again, the ONLY question is NOT “will an increase in the minimum wage cost jobs?”  We know it WILL.  The only question is HOW MANY?  And most all of those saying “Oh, not THAT many” are employed in some ivory tower or union headquarters at very, very PLUSH wages.

    • I find it fascinating that the Swiss have NO minimum wage.  Their streets must be littered with the rotting carcasses of the famished…  So inhumane.

      And undoubtedly all their engineers, watch makers, and pastry chefs are making only a dollar or two and hour.

    • Sweden also does not have such laws, but rely on collective bargaining between various unions and large employers to set a standard of sorts. So a small employer that is not covered by a collective agreement with unions usually follows along to maintain their own competitiveness (prospective employees will go and check the general conditions of the collective agreements before signing on), but perhaps vary wages in relation to other perks. This is considerably better than having a minimum wage law, although much power still resides with unions and big companies.

  • Considering an unemployed person is more likely to vote Democrat in hopes of some benefit of one kind or another, is it really a failed policy?

    • Yep.  All conclusions depend on the premises you employ.  Like, “This crisis involving brown children exposed to horrific risks is an example of cynical exploitation”.  But is that an indictment or a compliment?

      • All Democrats decisions are directed towards increasing their power, swelling their ranks which increases their power, to help march towards a defacto socialist/communist state.  Solving unemployment doesn’t help them.  Growing it does. 

        So its all a matter of context.  You can have your schadenfreude over their failure to help the economy while they never gave a damn about he economy and laugh all the way to the polls to increase their power even more. 

  • “‘We’re going to increase the minimum wage and your check will be bigger,’ what they don’t say and [what] the next sentence should be [is]: ”
    The other thing they don’t say is “and our check will be bigger too! Because we’re going to tax your additional income!   It’s only fair, we got it for you!”

  • Speaking of central planning and its necessary agencies…

    “Lotsa people should go to jail”: Jonah Goldberg on the VA scandalssss.

    Again, you cannot “fix” the VA…or any BIG GOVERNMENT agency. They are systemic failures on multiple levels, and they HAVE to be by their very nature.
    See also ObamaDoggle.

    • can’t fire them people, or incarcerate them!  What about their support for the Polar Bears!?   Their purchase of solar panels, and electric hybridized non-gmo gluten free vehicles?   Their tendency to vote Democrat!?
      Now they’re calling for the National Guard to come do Fallujah in Chicago.  We’ll just pretend, again, that the National Guard isn’t the Army so we can get around the Insane Clown Posse act, it’s surely no longer a shock to be in a Guard unit that finds itself in Afghanistan protecting Georgia, Ohio, Missouri, Tennessee, Oregon.  Do a search for ‘guard units in Afghanistan’ and see how many current deployments are going on.   Being deployed to the south and west sides of Chiraq instead of Khandahar will probably look damn good to a lot of those folks.
      I am encouraged to see all the scandals rush to Obama’s home-plate at the same time however, mainly because I’m tired of this slow collapse into oblivion that the media keeps burying.  Maybe the system can finally collapse in a way that can’t be glossed over as the White House intended and we can get this show on the road.

  • Not to worrk, amnesty will energize the economy somehow!!!

  • So first Lois Lerner says that we should be careful what we say in emails, and then asks if the OCS system — an internal IRS instant-message system — is also archived, as emails are.
    She is told “no.”
    She responds: “Perfect.”
    This is a big deal.

    • It’s at least a smoking knife.
      What in a fraud case we call a “badge of fraud”…evidence that people were cognizant of doing things that would raise questions if discovered.  You string a few of these together, and juries get it.