The Fallacy of Increasing the Minimum Wage

Robert Kuttner writes a typical liberal piece on the minimum wage in today's Boston.com. He seems to think this is a big winning issue for Dems based on the fact that a minimum wage proposal in Florida won big (72%-28%). The proposal was promoted by ACORN, a radical left group that seems to have the goal of transferring as much wealth as possible from the haves to the have-nots. What is his (and ACORN's) justification for increasing the minimum wage?

According to ACORN, the minimum wage initiative will give a full-time worker a $2,000 annual raise and will produce a total of $400 million in purchasing power for lower-income Floridians. Remember, these are people not on the dole. The measure also indexes the Florida minimum wage to inflation.

Do you notice something missing here? There's not one mention in his article of where all this money is going to come from. Who is going to be paying these $2,000 annual raises? What effect with the extra expense have on the wage payers?

This is a typically shortsighted approach that would have you believe that all business owners are flush with cash and that by waving a magic wand and increasing the minimum wage, the owners would simply have to pay it out of their huge profits. In reality it doesn't work that way. Many businesses who employ minimum wage workers are anything but flush with cash. When they get hit for an increase in wages that doesn't include a corresponding increase in production, something has to give. They will be forced to cut back in other areas and could end up cutting staff to pay the higher wages to the remaining employees.

Just once I'd like to see the anti-employer left open their eyes a little bit and get a dose of reality about the costs involved with employment.