Ask any legitimate economist about minimum wage requirements and you'll hear how counter productive they are. A higher minimum wage requirement not only reduces the number of jobs that pay minimum wage, it increases production costs in those businesses that pay minimum wage. And the higher production cost gets passed on to the consumer in the form of a higher price for the product. A twofer -- higher unemployment and inflation -- what a treat.
But it makes minimum wage proponents feel good and maybe gets them votes, so to hell with the consequences. (Now there's a bumper sticker.)
This brings us to a very good article by Ira Stoll in which he tells of a shopping experiment he conducted. See Obama’s High Wage Vision Hides Some High Costs to Consumers.
Mr. Stoll noted Obama's speech last month in which he vowed to focus his attention on asking businesses to raise wages. Obama singled out The Container Store as a business with a relationship with its employees which earned the President's approval. Mr. Stoll noted that The Container Store's website says they pay their sales people 50% to 100% more than the retail average. So he decided to pay one of their stores a visit. Exerpt:
Enticed by the presidential endorsement, I stopped by The Container Store in Chestnut Hill, Mass., on Friday and checked prices on a few items. ...
Then I headed to a nearby Walmart, whose wages and benefits are denounced as stingy by Mr. Obama’s political allies, to compare prices. ...
The full shopping list — ten of each kind of hanger, the can opener, the file cabinet, and the milk crate — cost $236.17 at The Container Store, and $48.69 at Walmart. That’s $187.48 more at The Container Store than at Walmart.
But he notes that Obama really isn't asking businesses to set an example, he's laying the groundwork for a federally mandated hike in minimum wage from $7.25 to $9.00.
If you think your tax bill or credit card bills are high now, just wait until the receipts of your shopping trips start including the passed-along costs for paying President Obama’s definition of “decent” wages.
This is the social democracy that Obama wants, but as Margaret Thatcher would put it, "They're progressively reducing the choice available to ordinary people."