For some sick reason–most likely related to the inherent sinfulness of human nature–fiscal conservatives tend to oppose raising minimum wages in America. Many flat out oppose minimum wages altogether. The fact that employed people at Wal-Mart are forced to beg for food donations so they can have a respectable Thanksgiving meal is an emotional appeal that does nothing to sway modern-day Scrooges. And the fact that McDonalds has decided to assist its paid employees in navigating government bureaucracies in order to receive food stamps and other welfare services also does nothing to soften the hearts or straighten the minds of the economically perverted.
But show one of these champions of the free market some shred of evidence that supports their disdain for minimum wages and they will delight in the statistical confirmation of their inhumane position. It often appears that being right for these people is far more important than being righteous.
Such is the case this week as Dr. Mark J. Perry from the American Enterprise Institute published a short post which appears to reveal the damaging effects of the “job killing” minimum wage.
Here is the chart Perry presents:
The reader’s conclusion is pre-fabricated based on the selected information presented: Minimum wages create higher unemployment; therefore, minimum wage is bad. Simple, straightforward, and backed by numbers.
Now, I like simplicity as much as anyone. I truly believe that the mark of genius is the ability to explain the complex in a simple way. However, ignoring blatant complexities in the attempt to simplify is not genius at all. In fact, it is either deceitful or foolishly ignorant. I have yet to determine which category Dr. Perry falls into, but given the prestige of his professorship at The University of Michigan and the relative intellectual capacity such a position entails, I would lean toward the former. Let me explain.
The European countries on the list that Perry presents (in particular, eight out of the nine countries with the lower unemployment figures) do not have minimum wages for a very important reason—a reason that has little to do with the power of the free market to determine what an hour of a human being’s time is worth. Rather than relying on enforced minimum wages, most European countries rely on something far more effective at ensuring a humane standard of living: a guaranteed minimum income, an entitlement that prioritizes Maslow’s hierarchy over corporate oligarchy. For various reasons, these European countries decided that giving employers the responsibility of ensuring the wellbeing of their respective populations was not wise. Perhaps they decided this because of the history of labor abuses since the industrial revolution, or perhaps it was because of empirical evidence that rejects popular conservative economic theories. Either way, these European countries decided on guaranteeing their citizens an income and standard of living via the state, rather than trying to force businesses to do so.
So what does that have to do with the price of tea in China, or in this case, the unemployment rates of European countries? Easy. Perry is trying to project the effects of one mechanism (i.e. minimum wage) in truly socialist economies onto the U.S., which despite the exaggerated claims of your crazy uncle, is still very much capitalistic, and, despite employing some measures to combat poverty, does not provide the economic security for the poor that European countries do.
Perry’s faulty comparison is like comparing the concussion rates of football players to tennis players, and then determining that the mechanism of helmets is the cause of more concussions among football players. (For those who need help with that one, consider economic systems as the different sports, helmets as minimum wage requirements, and concussion rates as unemployment rates. It works; I promise.)
Dr. Perry’s half-truth is surely successful at achieving its desired outcome. He and his proponents now have another statistic to verify their uncompassionate theory about how paying people less will improve economies. In an economy full of living, breathing, caloric-dependent people, however, Perry would be much better off supporting (or even mentioning) the guaranteed minimum income mechanism which ultimately keeps those European citizens from having to both work and beg for dinner at the same time.