Pennies at the Register, Dollars in the Paycheck

You know the boilerplate argument against higher wages in America, because you've heard it so many times from Fox News and CNBC pundits. But as service industry workers now mount protests against poverty-level pay and as the Associated Press reports that "four out of 5 U.S. adults struggle with joblessness, near-poverty or reliance on welfare," it is worth reviewing the blowhard's case for low wages one more time -- just to see whether it even makes sense.

The three-tiered argument goes like this: 1) Higher wages for workers create higher costs for corporations; 2) corporations pass on those higher costs in the form of product price increases; and 3) those price increases must be enormous for corporations to recoup all of their increased labor costs.

What gives these assertions such mass appeal is their populist insinuation that higher wages would hurt the Average Joe. Ultimately, that Average Joe is supposed to conclude that the supposed harm modest wage increases will inflict on him will be far greater than the benefit they will generate for him and the economy as a whole.

For the sake of evaluating this particular conclusion, let's set aside all of the other moral and economic questions at play in the larger debate over wages. Let's, for instance, bypass a discussion about why the richest nation on earth has a $7.25-an-hour federal minimum wage that condemns many workers to destitution. Let's also for a moment disregard the fact that CEOs of the biggest restaurant companies make more in a morning than the average minimum-wage worker in their companies make in a year. Let's even ignore evidence that raising the minimum wage boosts the economy by putting money in the hands of those who will most quickly spend it.

Click Here to Read Whole Article