CBO: Minimum Wage Increase will Increase Income Inequality

unemployment_line_ap_img

This is how the numbers have always worked. The left intervenes in the economy to reduce income inequality and destroys jobs which leads to more income inequality. The more it intervenes, the more people end up out of work or living from paycheck to paycheck. If it continues intervening with price controls and a planned economy, then basic staples become out of reach for most people and the only people to buy anything is in the black market.

But the left never learns and it never admits to the consequences of its own actions.

“Raising the minimum wage to $10.10 per hour would reduce employment by 500,000 in 2016 compared to if Congress left the minimum wage at $7.25 per hour, the Congressional Budget Office said in a report on Tuesday.

Raising the minimum wage to $10.10 would boost the income of about 16.5 million workers, the non-partisan body reported, raising their income by a total of $31 billion.”

The non-partisan body also found that raising the minimum wage to $10.10, as called for by the White House and congressional Democrats, would significantly boost the incomes of low-wage workers.

I’ll skip the Repub vs Dem arguments and cut to the chase. Raising the minimum wage is a choice. Like every policy, it has pros and cons. Some workers will benefit. Others will lose.

If the Dems simply admitted that, we could have a rational conversation on the subject. Since they won’t, we can’t. In their world, no one will lose their job, unless businesses are mean. That’s the philosophy that led to people fighting over powdered milk in government stores in Venezuela while the government denounces milk hoarding.

Minimum wage hikes hit workers in businesses with low profit margins and who are disposable and replaceable hardest. Those are the people who have the most precarious foothold in the economy already. Many of them are minorities. And then a few years later, Warren will demagogue some more about the income inequality she helped cause.

The hike looks good on paper, in practice it means half a million people losing their jobs while other people make slightly more money which will be offset by a hike in the very services and products they use by businesses that pass along the cost of the hike so that a lot of people lose their jobs and those who get the hike will see their living standard remain in place.

  • http://libertyandculture.blogspot.com/ Jason P

    It’s a general truth of economics that wage and price controls create shortages. Besides theory we have Richard Nixon (for those old enough).

    In the case of an artificial wage level, there will be a shortages of jobs for the willing. Thus, some will get more while others go completely without.

    I think I mentioned here some time ago that in northern Europe they maintain wage levels low enough for labor to clear (and hence have low unemployment rates). Even Swedish and German unions care more about getting everyone employed than in helping a few to get bigger pay checks.

    In southern Europe they jack-up income and hold it high while the unemployment reaches 25% overall and 50% for those under 30 years old (i.e. Spain, Greece, etc.) One might way that northern Europe, while partially socialist, at least is sane about it.

    In any case, I was thinking today who someone should write about the creation of inequality by those who claim to be fighting inequality. I was wonder if I had the time … thanks you saved me a job.

    In case you want more there’s also “favored labor” that gets bloated government pensions while “common labor” has to work until 70 years old to pay for those pensions (you talked about that before). There’s crony big banks that get bailed out and get bigger while reasonable “old school” banks can’t compete (see Hudson City Bank on Wikipedia). There’s homeowners who are getting subsidized loans while 1/3 of the population rents and gets no deduction. Government is all about creating inequality … by force, not the old fashion way: by earning it.

    • http://libertyandculture.blogspot.com/ Jason P

      PS. I like the NYT headline on the same subject: “Minimum Wage Increase Would Have Mixed Effects.” That’s putting a spin on what conservatives have been saying all along: some will lose their jobs when you jack-up wages for others. I can imagine the Times reporting a train derailing where 4 out of 300 get killed: “Train Crash Has Mixed Results.”

    • Daniel Greenfield

      Yes I was going to reference France and Spain.

  • Lisa

    Why is there a picture of Black and Latino’s in line for something. What are you trying to say when you use this picture. There are allot of white people out of work too. Don’t make it look like if we change in the minimum wage is only going to Blacks and Latino’s. These pictures are very misleading.

  • blert

    Minimum wage jobs are not OCCUPATIONS. They are not CAREERS.

    But, to listen to the Left, such employees are being systemically exploited — for a lifetime — or some such.

    How about: bogus minimum wage structure kills the first rung of employment.

    Overwhelmingly, these slots are for TEENAGERS. As a class — across all races — current Federal policy brew is delaying the launch of this entire age cohort.

    With Greece and Spain, you see this dynamic taken to extremes.

    0-care is just the topper. It functions as virtually a flat tax on unskilled labor — on talent that has no track-record of employment.

    That’s like having no credit history … while seeking a loan.

    Teenagers need to have at least some foot-hold in the labor market to begin their rise up the ranks. Minimum wage jobs are just that step.

    So, it’s much, much, much, worse than described. Barry is breaking the escalator of wage gains for the average Joe.

    Classic Punahou thinking, this is.

  • objectivefactsmatter

    “Like every policy, it has pros and cons. Some workers will benefit. Others will lose. If the Dems simply admitted that, we could have a rational conversation on the subject.”

    That started happening when the left shifted from being stupid to being communist dupes.