In the game of chicken, the trick is knowing when to flinch.

Despite the fact that the majority of economists agree that raising the minimum wage increases unemployment, particularly for those most at risk (young, inexperienced, under-educated), politicians and left-wing advocacy groups keep pushing.  $10/ hr.  $15 / hr.  Sky’s the limit.

The cavalier manner with which advocates assume employers  (particularly the big corporations) will simply pay more for something without reducing consumption (in this case, labor) reveals their ignorance. The pervasive perception among these whiners is that corporations are at the mercy of ‘the people’. If they print enough bumper stickers and T-shirts and march in the streets, certainly their politicians will bend over backwards to appease them. Why wouldn’t the greedy CEO?

The problem with their assumption is that the big, corporate CEO has a plethora of options available before overpaying for labor. It’s well known that manufacturing and customer service companies can easily move overseas. Recently, companies have announced plans, like Walgreen, to move their corporate headquarters overseas to lower their taxes.

There are obviously many businesses like services, health care and transportation that need to have boots on the ground in order to operate. But they, too, will adjust their consumption of labor if the cost is high enough. Instead of hiring 3 employees, the company will hire 1 who will end up being overpaid and overworked.

Real economic prosperity comes from the unencumbered, totally voluntary, free market where prices reflect the intersection of supply and demand. Any constraints placed on the free market invariably create more problems than they claim to solve.


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