Raise the minimum wage, but do it with caution
3/18/18, Raise the minimum wage, but do it with caution, Matthew Albright – When the General Assembly takes up this subject again, legislators on both sides will “say confidently that economics is on their side.” Arguments that have become all too familiar – impressive looking studies – “but the truth is that nobody can say for certain exactly what minimum wage is optimal for Delaware’s economy.” So face it, the real issue is one of ideology versus “clear-cut economics.” US is “swimming in wealth;” surely it’s “reasonable to require that people doing a full day’s work receive at least enough to live on.” Who thinks Delaware’s current $8.25 per hour (or $17,160 annually) is enough? Big businesses sure shouldn’t complain if they had to pay more, not with all those obscene executive bonuses and gigantic stock buybacks. “I’m sympathetic to small businesses, but an extra dollar or two an hour isn’t going to be lethal to most of them. The key is to avoid artificially making wages too much too fast,” which could result in learning the hard way that we had raised the minimum to a point that it would “seriously hurt employment.” So why not bump the minimum up to $9.25 per hour? “The General Assembly’s long-standing practice of period modest raises may not be thrilling. But it’s the right way to run a state.” For those who believe in the free market, it’s unclear why the government should set a minimum wage at all. Perhaps it would be better for labor rates to be set by supply and demand, just as other prices are. At the margin, an increase in the minimum wage will reduce employment opportunities (perhaps encouraging more investment in robots that don’t get paid a wage at all) – although we grant that this effect would be more noticeable with a big boost to the minimum wage than with a smaller one. Basically, the policy being followed is how high can we make the minimum wage and get away with it.