The Minimum Wage Rises Today

Did you buy gasoline today in a state that mandates attendant service?

Was that fillup more valuable? Today, according to Congress, it was.

Because, according to an AP wire story,

"About 2 million Americans get a raise Thursday as the federal minimum wage rises 70 cents. The bad news: Higher gas and food prices are swallowing it up, and some small businesses will pass the cost of the wage hike to consumers.

The increase, from $5.85 to $6.55 per hour, is the second of three annual increases required by a 2007 law. Next year's boost will bring the federal minimum to $7.25 an hour."

So whether you think so, or not, many vendors whom you patronize are being forced to pay some of their employees more just....because.

Is more value being created? Probably not. Will those minimum-wage employees work more than 10% harder and more creatively?

Doubtful.

This is one classically-defined manner in which we invite inflation into our economy. Paying more for no more value creation.

If, like me, you covered this topic in economics in college or grad school, you know that today's minimum wage hike probably will result in the under- or unemployment of a few tens of thousands of low-end laborers whose new minimum pay won't be justified.

Moreover, if the AP story is correct, this only affects 2 million workers. Out of how many? 153.1 million estimated in 2007, according to this CIA factbook entry. Less than 2% of workers.

Yet another instance of government wrong-headedly propagating antiquated notions of 'fairness' from an era in which labor, capital and other markets were much more primitive and functioned less effectively.

God save us from ill-conceived and continued legislation like this, e.g., mortgage foreclosure moratoria, energy production prohibition, and more government-guaranteed housing financing.

None of which would seem to be adding value in our economy. Because, if they did, producers would already be doing them.