Pandering Part 3
I guess it is never safe to have my blog open when the presidential candidates are giving speeches. Well, Hillary Clinton has just advocated that anyone working full time be guaranteed at least $9.50 per hour. (I presume this is in addition to the employer providing full benefits). While I am all for people being paid well, such guarantees can be counter-productive and actually harm younger workers.
If a high school drop out or a new high school graduate goes out to get a job, what skills do they have to create at least $15 per hour in value to a company? ($9.50 per hour plus taxes and benefits). Some may have those skills, but many won't. In fact, most people earning minimum wage are newer employees and receive raises within six months. Allowing a lower wage allows employers to hire low skilled workers and train them without a substantial loss. As their value increases, so does the wage. Otherwise, they go elsewhere. In Basic Economics, Thomas Sowell makes a compelling case that living wage laws actual create higher unemployment rates in the very people who such laws are intended to help.
Anyone who does not believe the negative impact of high costs for low skilled workers should look at France. In France the taxes paid on employees are very high, making the labor cost of hiring new people high, even if the actual wage paid is modest. Additionally, it is difficult to fire under-performing employees. Thus, French companies avoid hiring until they absolutely have to. The result - an unemployment rate which is three times that in Utah. Most of the unemployed are young workers - with the unemployment rate exceeding 20 percent in some areas.
The government finally realized that the only way to get companies to hire was to give them the ability to fire young employees for the first two years. The result - riots in the streets. I guess the young people in France would rather be unemployed than face the risk of being fired.
The best way to encourage high wages is to create competition for employees. The only way to create competition for employees is to have a vibrant economy - something that mandating high wages for all full time employees (regardless of experience) is likely to prevent.
P.S. I have a couple more copies of Basic Economics on CD. If you would like to listen, I will send them to you on the condition that you pass them on.
If a high school drop out or a new high school graduate goes out to get a job, what skills do they have to create at least $15 per hour in value to a company? ($9.50 per hour plus taxes and benefits). Some may have those skills, but many won't. In fact, most people earning minimum wage are newer employees and receive raises within six months. Allowing a lower wage allows employers to hire low skilled workers and train them without a substantial loss. As their value increases, so does the wage. Otherwise, they go elsewhere. In Basic Economics, Thomas Sowell makes a compelling case that living wage laws actual create higher unemployment rates in the very people who such laws are intended to help.
Anyone who does not believe the negative impact of high costs for low skilled workers should look at France. In France the taxes paid on employees are very high, making the labor cost of hiring new people high, even if the actual wage paid is modest. Additionally, it is difficult to fire under-performing employees. Thus, French companies avoid hiring until they absolutely have to. The result - an unemployment rate which is three times that in Utah. Most of the unemployed are young workers - with the unemployment rate exceeding 20 percent in some areas.
The government finally realized that the only way to get companies to hire was to give them the ability to fire young employees for the first two years. The result - riots in the streets. I guess the young people in France would rather be unemployed than face the risk of being fired.
The best way to encourage high wages is to create competition for employees. The only way to create competition for employees is to have a vibrant economy - something that mandating high wages for all full time employees (regardless of experience) is likely to prevent.
P.S. I have a couple more copies of Basic Economics on CD. If you would like to listen, I will send them to you on the condition that you pass them on.
I'd love a copy.
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Yes, I would like a copy of Basic Economics.How do I get it ?
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