Monday, September 24, 2012

A Minimum Wage Increase — How Can This Work?

There is now a proposal on the ballot in Albuquerque to raise the minimum wage (already above the national minimum wage) by an additional dollar. The measure's proponents say the higher minimum wage will infuse a bunch of new money into the city's economy.


The measure won't bring in any new money. Yes, it will give more money to those making minimum wage. It will take that money from one of two sources:

    1. From the business owners who will find their return on their investment reduced, or
    2. From other employees either fired or not hired as a result of the higher labor costs.

Either way, this proposal brings no new money into the economy, but simply shifts money from one person to another -- both of whom would spend it.

In other words, this proposal will damage business owners and/or workers without producing any economic improvement.

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