LETTER TO THE EDITOR: Wages subject to law of demand

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Progressives never fail to get their causation backward. Many news outlets are reporting that labor unions and union advocates are staging protests this Thursday. Reports state that fast-food workers and other low-wage employees will strike in 100 cities across the United States, demanding an increase in wages to $15 an hour. President Obama has stated that he would support a rise in the federal minimum wage to $10.10 an hour, while Senate Majority Leader Harry Reid, Nevada Democrat, has promised a vote on increasing the federal minimum wage by the end of this year. Does increasing the minimum wage really create a rise in our standard of living? Let’s take a look.

If I asked others what the consequence of a rise in the price of automobiles or gasoline would be, I am almost certain everyone would tell me individuals will buy fewer automobiles and less gasoline. This is known as the law of demand, and there are no known exceptions to this law in the universe. If one could find an exception, he or she would immediately be guaranteed a Nobel Prize in economics. Why then do progressives constantly profess that a rise in the price of labor would not abide by the law of demand? An increase in the price of labor means individuals will demand less of it.

Progressives seem to think that the price of labor does not affect the price of other goods and services. If the price of labor is forcefully increased by government, businesses will either raise prices of their products to offset the price increase in labor, or they will adjust their production process. If businesses raise their prices, workers will notice that their pay increase had no effect and become trapped in an infinite cycle of demanding higher and higher wage increases with no real increase in value. If businesses adjust their production process, they may begin to move their companies overseas where labor is cheaper or substitute automated production in place of physical labor.

Fast-food jobs were never meant to be career positions. They were meant to give young, inexperienced workers an opportunity to build their skills for higher-skilled future employment or education. However, this incentive was eroded long ago when labor unions began demanding federal minimum wages in the first place, effectively knocking young, unskilled laborers out of the market.



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