By Bernard Avishai
The New York Times - January 29, 2014
The President announced on Tuesday, in his State of the Union
address, that he will increase the minimum wage for federal contractors
to ten dollars and ten cents. He wants, he said, to “give America a
raise.” Raising the minimum wage appeals to those who “do not understand economics,”
the former Representative Ron Paul argued recently: if you make it
costlier for companies to employ each person, you lower the demand for
workers and kill jobs. Representative Paul Ryan offered another view: “I
think it’s inflationary,” he said. If you raise wages, companies’ costs
go up, and then they raise prices to compensate.
These two arguments—which, combined, suggest that raising wages for
the poorest winds up hurting the poorest—are very old. So old that in
June of 1865, in London, Karl Marx interrupted work on “Das Kapital” to
refute them.
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