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Why Minimum Wage is a bad thing
It seems heartless to say but when you think everything through, as Peter Schiff does in this missive, it is a negative for both workers and employers. Minimum wage raises labor costs, which hurts business. In fact, during the Great Depression, unemployment skyrocketed because Hoover pressured business leaders to maintain wages in an environment of severe deflation. Businesses had no choice but to cut jobs. The loss of these lower level jobs has deep consequences as Schiff explains:
The disappearance of these jobs has broader economic and societal consequences. First, jobs are a means to improve skills so that low skilled workers can offer greater productivity to current or future employers. As their skills grow, so does their ability to earn higher wages. However, remove the bottom rung from the employment ladder and many never have a chance to climb it.
So the next time you are pumping your own gas in the rain, do not just think about the teenager who could have been pumping it for you, think about the auto mechanic he could have become - had the minimum wage not denied him a job. Many auto mechanics used to learn their trade while working as pump jockeys. Between fill-ups, checking tire pressure, and washing windows, they would spend a lot of time helping - and learning from - the mechanics.
Because the minimum wage prevents so many young people (including a disproportionate number of minorities) from getting entry-level jobs, they never develop the skills necessary to command higher paying jobs. As a result, many turn to crime, while others subsist on government aid. Supporters of the minimum wage argue that it is impossible to support a family on the minimum wage. While that is true, it is completely irrelevant, as minimum wage jobs are not designed to support families.
A minimum wage may seem like a good thing in the short run but in the long run it is clearly a bad idea. Too many economic policies are designed for the short term at the expense of the long-term. This is just another of a litany of examples.
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