Living Wage = High Unemployment

Pejman:

My hometown appears ready to institute a "living wage" requirement on employers in the city...

This minimum wage amounts to $13 an hour. Thomas Sowell:

Making anything more expensive almost invariably leads to fewer purchases. That includes labor.

Why don't people get this part? The minimum wage has negative consequences. One can't simply legislate poverty out of existence.

Comments

[slickdpdx]

I agree with you the net effect will likely be bad for Chicago, but I also see America's top corporate managers claiming and taking salaries and benefits that are not market based. I as a shareholder, if I had any influence, would not be approving these packages. Something is broken. There is a very cozy relationship among the folks at the top. When the people or entities responsible don't correct their behavior, legislation often follows (often, not always, ill-advised.)

[Isaac Schrödinger]

In that case, shareholders ought to clamor for openness in the salaries offered to top managers. This legislation is definitely ill-advised since it doesn't address that issue and it hurts the folks at the very bottom of the economic ladder.

[David Boxenhorn]

People don't think in terms of dynamic systems. You have the same problem with appeasement.

[Isaac Schrödinger]

True. Static economic analyses are simple and often incorrect.

[David Boxenhorn]

The solution is to state it in static terms:

Chicago may become the first city in the nation to require "big box" retailers like Wal-Mart or Home Depot to fire all employees earning less than a "living wage" of at least $10 an hour plus $3 an hour in benefits.

[slickdpdx]

David: Walmart just might be making enough in Chicago to stick it out. They'll certainly find out. Costco seems to be doing all right.

Isaac: I would agree with you if I saw the institutional investors applying any meaningful pressure to corporations to pay dividends. (How they would apply that pressure I admit I don't know. I guess paying dividends doesn't make a stock as valuable as paying obscene top manager salaries.) It would also be easier if I didn't repeatedly see top corporate failures take the profits that might have helped avoid that failure and get quickly hired at the top of another corporation. Sometimes its more like musical chairs up there, than a any kind of competitive environment.

[David Boxenhorn]

Sometimes its more like musical chairs up there, than a any kind of competitive environment.

Companies that make too many mistakes fail.

And you're wrong, shareholders often speak up. Remember the Compaq HP merger? It almost didn't go through because of shareholder objections.

Not that I'm claiming that everything's perfect!