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Conservatives Are “Mistaken” about the Minimum Wage

May 14th, 2016

BoehnerquoteI have written before about how conservatives make rookie “mistakes” in economics when it serves their purposes. They claim that Reagan doubled revenues but “neglected” to take inflation into account; they claim Obama drove unemployment up to 10% but “forget” that unemployment is a lagging indicator; they claim minimum wage hikes caused job losses in 2008, but “overlook” the subprime mortgage crisis.

With the current minimum wage debate, conservatives are at it again. With willful ignorance, they make two glaring “mistakes” in their claims.

“Mistake” #1:

In 2013, Boehner said, “When you raise the price of employment, guess what happens? You get less of it.” This quote exhibits the exact same knowing ignorance behind the whole minimum wage issue: that increasing wages is an cost, and when cost goes up, consumption goes down.

The rookie “mistake”? That employees are a commodity. They’re not. They’re an investment. Saying that raising wages will make businesses hire less is like saying that when stock prices go up, people don’t buy as many.

When you raise wages, people leave the job less; turnover is reduced. Employees stay on longer, acquire more experience, have greater job satisfaction, and they become more skilled, more efficient, and more effective at their jobs. In short, their value rises. Employers recognize this, and give the employee greater responsibilities. End result: by investing, the employee becomes more valuable, thus returning on the investment and making it worthwhile to the employer.

“Mistake” #2:

Conservatives often claim that businesses will not be able to afford higher wages; a common retort they have is, “Where do you think that money comes from?” The answer is easy: where do you think the money goes?

If all minimum wage earners get a higher wage, that is a massive amount of money going into the economy. Minimum wage workers do not stash their money overseas like a rich person would; they buy goods and services here and now, because they need them. Where do they shop? They shop at the exact kind of business that pays their workers the minimum wage. So the money that pays minimum wage workers goes right back to the businesses paying minimum wage.

That’s where the money comes from.

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  1. Troy
    May 15th, 2016 at 07:22 | #1

    Shocking I know, but image if Republicans/Conservatives actually had the first clue about . . . anything, really, other than “me-me-me”.

    I was warming up my fingers while reading this getting ready to fire in the point you made in your closing.

    Spending power is economic power, and we need more spending power in the economy, not more “job creators” aka “savers” aka rich people taking more money out of the US economy that they are putting back into it.


    is a particularly brutal chart. I don’t know how actually descriptive it is of current conditions, but taking it at face value we can see that the current economy running at 75% of capacity currently has recession-level slack in it — and it’s getting worse again!

    but like everything else in the “Party of Stupid” we know as the GOP, to face these facts would destroy their entire ideological foundation.

    For the past 100 years the GOP has existed to enrich the wealthy and turn the screws on labor in this country, and they’ve succeeded tremendously at this, thanks to the twelve years of Reagan/Bush 1981-1993 and Clinton going along with much of the GOP Congress of 1995-2000, the Neo-Nero administration liquidating everything wholesale 2001-2009, and the GOP Congress crawling back into power 2011-now.

    I was born in the 1960s and the GOP has had their thumb on the scales 1969-1976, 1981-1992 and 1995-2008, and 2011-now, plus of course control of the Supreme Court since Nixon got his appointees in.

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