Not all minimum wage advocates have pure motives, economist says
A proposal to raise Illinois' minimum wage to $15 per hour would knock low-skilled workers out of their jobs, George Mason University economist said on a Chicago-based radio show recently.
"I think a lot of minimum wage advocates are genuinely sincere," Don Boudreaux, senior fellow at the F.A. Hayek Program at the school's Mercatus Center, said on "Illinois Rising." "They really believe that the minimum wage will improve the lives of a lot of low-skilled workers; that's why they advocate for it. But a lot of minimum wage supporters are, in fact, not so pure in their motives."
Boudreaux said others, however, want to replace low-skilled workers with higher-skilled employees.
"So the people who advocate the minimum wage -- the combination of people with pure but misguided misunderstanding of economics, along with people whose motives are not so pure -- they want to get rid of the competition that's posed by low-skilled workers."
State Rep. Will Guzzardi (D-Chicago) introduced a bill to the state legislature that would raise Illinois' minimum wage from $8.25 to $15 an hour. The bill would not preempt home-rule authority in more than 200 home-rule municipalities in Illinois.
Cook County last fall approved a $13 minimum wage that will affect Chicago-area suburbs.
Such moves necessarily reduce the number of jobs available to low-skilled workers, Boudreaux said.
"When you force someone to pay more for something, they'll buy less of it," he said. "So if you force employers to pay more for low-skilled labor, they're going to hire fewer low-skilled laborers. This is going to destroy some jobs on the lower rung of the ladder. And what that will do, of course, is cause people who would otherwise get jobs to be without jobs and then to be not only without the income of those jobs but, in many cases and more importantly, to be without the opportunity to gain job experience and on-the-job skills, which will prevent them from getting better jobs in the future."
Boudreaux also criticized minimum wage advocates who believe forcing employers to pay more to their unskilled workers is a quick and easy way to improve the lives of those workers.
"If that were true, then why stop at $15; why not $150?" Boudreaux said. "Why not $1,500? There is no logical rebuttal to that claim. Of course, people see, instinctively, that such wages as $150 an hour would be too high. What they don't see, for some bizarre reason, is that wages of $15 are too high for workers who cannot produce at least $15 an hour worth of value for employers."
McDonald's and Walmart are two of the biggest employers that largely rely on minimum-wage workers. In exchange, they make huge profits, Boudreaux said. This year, second-quarter earnings for McDonald's were reported at $6.27 billion, while Walmart surpassed expectations by posting $131.69 billion for the 12-month period that ended April 20. Taxpayers also foot the bill for billions of dollars in social services benefits to subsidize the pay for low-skilled workers, he said.
"That's the bottom line," Boudreaux said. "If a worker cannot produce $15 an hour of value for an employer, in terms of that employee's output, then no employer is going to hire that worker. That worker would still remain unemployed. Period. There's just no two ways about that fact."
Illinois Rising is hosted by Dan Proft who is a principal in LGIS (Local Government Information Services), which owns this publication.