Thursday, July 8, 2010

Help the individual or help the whole?

I was having a conversation with a friend during the ride to work about minimum wage laws. While we both disagree and agree on many points the dialog was very interesting. When really boiled down the content was really about how to help society. Whether you help society by helping the individuals in trouble or by picking the method that hinges on long term economic pressure to bring about change. The minimum wage law shifts earnings from a broad base to a smaller base but pays each individuals more. Or in some cases it can increase earnings because supply of labor was originally plentiful enough to force the price of labor down. In order to effectively use minimum wage to increase the living standard one would have to know that the wage rate was being pushed down by over supply. Since we cannot ensure this is always the case in society it leaves us with this dilemma. We can either help some individuals by increasing the wage law, or we can keep barriers to market entry low and point toward long term growth. So how do we reach a middle ground. The point is there will be lots of argument over the details, but I think there are two great things we could do. First realize that there are situations when learning is part of a job where a lower minimum wage probably should be allowed. Second if we are going to have a minimum wage we need to ensure we lower other barriers to market entry like health care! What do you think?

0 comments:

Post a Comment