Ron Paul: Learn a Little Economics

Source:Lew Rockwell

If you are talking about raising the minimum wage from $7.25 and hour to 10-12 dollars an hour without any relief for small employers especially people who run, lets say local restaurants or hardware stores, then I would agree with you that giving low-skilled workers making seven or eight bucks and hour would hurt those business’s. But that is not the minimum wage increase that I’m on favor of. What I want to do is raise it to 10-12 dollars an hour with a thirty-percent tax break at least for small employers.

Which means these employers payroll costs wouldn’t go up a dime based on the minimum wage. And for any minimum wage increase to come out of this divided Congress with a Republican House and a Democratic Senate, the tax break I’m talking about is probably going to have to be part of that minimum wage increase. Otherwise it probably has about a zero percent chance of passing and even with the tax break, the chances of it passing aren’t very good to begin with.

The economics of increasing the minimum wage to 10-12 bucks and hour again with the tax break that I’m talking about are very clear. You want more people working and fewer people collecting public assistance, then work simply has to pay more than not working. And that is not the case right now if you add up all the benefits that low-income people can make in dollars from public assistance. A low-skilled person can get more money not working at all and perhaps not even looking for work. Which doesn’t do that person much good or their kids much good or the economy as a whole much good.

The minimum wage isn’t a cure-all for poverty in America. You need more educational and job training opportunities for our low-skilled adult population as well. But you increase the minimum wage to the point that this population makes more money working whatever the job, than not working and you make education and job training available for these adults, they can get themselves good jobs and get off of public assistance all together which benefits everyone.

Actually having the minimum wage as low as it is right now at $7.25 an hour hurts the economy, because the taxpayers have to pick up the rest of the bill that these employers don’t pay to take care of our less-fortunate population. And that means keeping taxes high to the point to pay for those public assistance benefits. Which any real Conservative shouldn’t be in favor of.