Perhaps the worst of the President’s many bad ideas was raising the minimum wage. Of course, he made it seem so easy: “No one who works full-time should have to live in poverty.” Hiking the minimum wage to $9.00 an hour “would raise the incomes of millions of working families.” Moreover, “For businesses across the country, it would mean customers with more money in their pockets.” Most important—though left unsaid, of course—was that raising the minimum would likely yield more votes in the next election and more political contributions from unions.
The minimum wage always has been a dumb policy. The government obviously can mandate that companies pay a certain amount whenever they hire someone. But government cannot require firms to add new workers—at least not at present. This means the higher the wage set by the government, the more people who will be priced out of the marketplace. Most vulnerable are those with the least skills, education, and experience (African American teenagers, for example).
.. there is something otherworldly about politicians claiming to do good by punishing the very companies hiring the workers with the least opportunities. Venture capitalist Nick Hanauer complained about “private low-wage companies,” but some of them eventually turn into private high-wage companies. And all employ people who would otherwise be worse off—otherwise they would not be working at such firms.
Ironically, the minimum wage does help some workers, namely those already earning more who gain when companies respond to a rising wage floor by automating and reshuffling duties. If a firm is forced to pay extra, it will hire someone who is more skilled and can produce more. That’s why labor unions support the minimum wage, even though it directly applies to few of their members.
The minimum wage is typical of the sorts of economic policies concocted by Washington: apparently benevolent but completely wrong. Raising the minimum wage would be bad economics. It would also be unjust. It is time the American people understood that the government does not have its own money to give away. What politicians call compassion would be theft if carried out by anyone else.