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February 13, 2012
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Mark Clayton: How did Anonymous hackers eavesdrop on FBI and Scotland Yard?
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Victoria Kim: Immigrant-smuggling ring used black drivers to avoid racial profiling
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Reza Kahlili : Ex-CIA spy in Iran's Revolutionary Guard: What Obama doesn't grasp about striking deals with Tehran
Tina Susman: For woodchuck rescuer, every day is Groundhog Day
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Brian Bennett: US officials see increasing threat of domestic attack from Iran
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January 31, 2012
January 30, 2012
Paul Richter and Ramin Mostaghim: Misreading Teheran's limits -- deadly and economically devastating as they may be -- is a risk administration, Europe seem willing to take
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Meg Handley: Banks Revamping Rewards Programs to Woo Customers
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Yochonon Donn: In liberal New York City, fervently-Orthodox Jews may soon be getting a district to call their own
Jeannine Stein: An inflated ego and thinking you're 'all that' doesn't just make others sick of you, it can make you ill
Katy Hopkins: New budget rules may affect how much money you get for college
January 26, 2012
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Jeannine Stein: Mental illness struck one in five U.S. adults in 2010: Report
January 25, 2012
Richard Simon: House passes two bills endorsing the use of religious symbols at military memorials
Fred Weir: Putin: Multiethnic Russia cannot survive as a US-style 'melting pot'; must find its own way
Susan Johnston: 5 Sneaky Coupon Strategies Consumers Should Watch Out For
January 24, 2012
Carol Clark: The price of your soul: How your brain decides whether to 'sell out'
Caroline B. Glick: America lost most in 'Arab Spring'. Sadly, many voters still don't grasp the extent
Warren Richey: Drug criminal scores win in GPS ruling from conservative-leaning high court
Erika Bolstad: Black conservatives gather to talk about gaining strength
January 23, 2012
Melissa Dribben: Jewish voters to play a key role in Florida's Republican primary
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Ali Safi: U.S. envoy gives Taliban terms for peace talks
January 19, 2012
January 18, 2012
January 17, 2012
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January 13, 2012
Ben Lynfield: Israeli lawmakers move to annex Jewish Judea, one museum at a time
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January 12, 2012
Warren Richey: Landmark Supreme Court ruling a 'resounding win' for religious groups
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Katy Hopkins : Consider This Before You Pay for an Online Degree
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January 11, 2012
Shari Roan: Millions of atrial fibrillation sufferers at risk for devastating, but preventable, stroke
Tom Hussain: Pakistan -- recipient of more than $21 billion in civilian and military aid -- speeds pursuit of Iranian pipeline, defying US
David G. Savage: High court signals it won't be loosening TV's 'indecency' rules
Stephen Ceasar: Oklahoma's Islamic law amendment can't go into effect, court rules
January 10, 2012
Reza Kahlili: From an ex-CIA spy: US must exploit new split in Iran's Revolutionary Guard
Karen Kaplan: Study: Nicotine replacement products ineffective when used in real-life situations
January 9, 2012
Michael Doyle: Put through legal hell over dream home, couple fought back hard --- all the way to Supreme Court
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Jewish World Review
August 9, 2006
/ 15 Menachem-Av, 5766
The minimum wage vision
By
Walter Williams
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http://www.JewishWorldReview.com |
There are decent people, without a selfish hidden agenda, who support increases in minimum wages as a means to help low-skilled workers, and there are other decent people, with the identical goal, who strongly oppose increases in the minimum wage. So the question is: How can people who share the same goals, helping low-skilled workers, come up with polar opposite means that produce polar opposite results?
It all depends on one's initial premise. It would do us some good to make our initial premises explicit and check them against reality. One initial premise is that an employer needs a certain number of workers to accomplish a given task. That being the case, increasing the minimum wage simply means that all low-skilled workers will enjoy a higher salary and employers will have lower profits and/or customers will pay higher prices. With this vision of how the world operates, the logic of increasing the minimum wage as a means of helping low-skilled workers is impeccable.
Another initial premise is that there is no fixed number of workers necessary to accomplish a given task. Employers might be able to substitute capital for labor such as using dishwashing machines instead of dishwashers, automatic elevators instead of elevator operators, self-service gasoline stations rather than full-service gasoline stations, online reservations rather than reservation clerks or relocating their operation overseas. People who share this initial premise can still have concern for the welfare of low-skilled workers but argue that increasing minimum wages will cause unemployment for some of them and deny job opportunities for others. Given their initial premise, the logic of their argument is also impeccable.
Thus, the question to decide is which initial premise best describes how the world operates. Is it the one that says there's a fixed number of workers necessary to perform a given task, or the one that says employers have flexibility in the mix of workers and capital they use and where in the world they can choose to manufacture? I think the latter description more properly describes how the world operates.
Place yourself in the position of an employer and ask: If a worker costs me, say, $7 in wages, plus mandated fringes such as Social Security, unemployment compensation, sick and vacation leave, making the true hourly cost of hiring a worker $9 an hour, does it pay me to hire a worker who's so unfortunate to have skills that enable him to produce only $5 or $6 worth of value per hour? Most employers would conclude that doing so would be a losing economic proposition.
There are a couple other villains in the piece that force employers to respond to increases in wages that exceed a worker's productivity. If he did hire such workers, he would earn lower profits. Soon, investors would abandon him and put their money where returns are higher.
There's another villain the customer. If the employer retained workers whose wages exceeded their productivity, to cover his costs he would have to charge you and me higher product or service prices. I don't know about you, but I prefer lower prices to higher prices, and I'd switch my patronage to those firms who adjusted to the higher labor cost.
Congress can easily mandate higher wages, but they cannot mandate higher worker productivity or that employers hire a particular worker in the first place. Those of us who truly care about the welfare of low-skilled workers should focus our energies on helping them to become more productive, and a good start would be to do something about the rotten education that many receive.
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© 2006, Creators Syndicate.
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