My January 30,2021 letter to President Joe Biden, Milton Friedman noted, “The minimum wage law is most properly described as a law saying that employers must discriminate against people who have low skills”

Ep. 4 – From Cradle to Grave [6/7]. Milton Friedman’s Free to Choose (1980)

January 30,, 2021

President Biden c/o The White House
1600 Pennsylvania Avenue NW
Washington, DC 20500

Dear Mr. President,

Thank you for taking time to have your office try and get a pulse on what is going on out here in the country.

I read this article on January 15, 2021 about your announcement the previous night concerning your first proposal to Congress.

Biden’s $1.9 Trillion COVID Relief Package Includes More Stimulus Checks, State Government Bailout, $15 Federal Minimum Wage

President-elect Joe Biden called Thursday night for a $1.9 trillion COVID-19 package that will include another round of relief checks for most Americans, a bailout for state and local governments, boosted unemployment payments, and a higher federal minimum wage.

Biden is also proposing $170 billion to assist in reopening schools and a $350 billion bailout of state and local governments. And on top of all that, Biden called for raising the national minimum wage to $15 an hour.

Those last two details may be the most contentious details. Democrats pushed for a similar bailout in earlier negotiations over COVID stimulus bills, but Senate Republicans blocked them. Democrats will have a slim Senate majority once the winners of two Georgia run-off elections are sworn-in, but the case for a state bailout remains shaky.

Biden did not address plans for spending offsets or tax increases in his speech. An unnamed Biden official told The Wall Street Journal on Thursday that the president-elect did not believe now was the time for worrying about widening budget deficits and that Biden’s focus was on the more immediate emergency.

I wanted to let you know what I think about the minimum wage increase you have proposed for the whole country and I wanted to quote Milton Friedman who you are familiar with and you made it clear in July that you didn’t care for his views! Let me challenge you to take a closer look at what he had to say!

Daniel Mitchell quotes Milton Friedman on minimum wage and contrasts Trump a d Biden approach!

Trump vs. Biden on the Minimum Wage

In another display of selfless masochism, I watched the TrumpBiden debate last night.

The candidates behaved better, for whatever that’s worth, but I was disappointed that there so little time (and even less substance) devoted to economic issues.

One of the few exceptions was the brief tussle regarding the minimum wage. Trump waffled on the issue, so I don’t give him any points, but Biden fully embraced the Bernie Sanders policyof basically doubling the minimum wage to $15 per hour.

This is very bad news for low-skilled workers and very bad news to low-margin businesses.

The economic of this issue are very simple. If a worker generates, say, $9 of revenue per hour, and politicians say that worker can’t be employed for less than $15 per hour, that’s a recipe for unemployment.

Earlier this month, Professor Steven Landsburg on the University of Rochester opined for the Wall Street Journal on Biden’s minimum-wage policy.

It isn’t only that I think Mr. Biden is frequently wrong. It’s that he tends to be wrong in ways that suggest he never cared about being right. He makes no attempt to defend many of his policies with logic or evidence, and he deals with objections by ignoring or misrepresenting them. …Take Mr. Biden’s stance on the federal minimum wage, which he wants to increase to $15 an hour from $7.25. …So why does Mr. Biden want to raise the minimum wage…?He hasn’t said, so I have two guesses, neither of which reflects well on him. Guess No. 1: He’s dissembling about the cost. …The minimum wage…comes directly from employers but indirectly (after firms shrink and prices rise) from consumers. A minimum wage is a stealth tax on eating at McDonald’s or shopping at Walmart. …Mr. Biden should acknowledge the cost of wage hikes and argue for accepting it. Instead he’s silent about the cost, hoping he can foist it on people who won’t realize they’re footing this bill. Guess No. 2: He’s rewarding his friends and punishing his enemies. New York is going to vote for Mr. Biden. The state also has a high cost of living and high wages—so New Yorkers would be largely unaffected by the minimum-wage hike. Alabama is going to vote against Mr. Biden. Alabama has a low cost of living and relatively low wages—so under the Biden plan Alabama firms would shrink, to the benefit of competitors in New York. Alabama workers and consumers would pay a greater price than New Yorkers.

____

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Let’s share one last bit of evidence. Mark Perry’s article referenced some new research by Jeffrey Clemens, Lisa Kahn, and Jonathan Meer.

Here’s what those scholars found in a study published by the National Bureau of Economic Research.

We investigate whether changes in firms’ skill requirements are channels through which labor markets respond to minimum wage increases. …Data from the American Community Survey show that recent minimum wage changes resulted in increases in the average age and education of the individuals employed in low-wage jobs. Data on job vacancy postings show that the prevalence of a high school diploma requirement increases at the same time. The shift in skill requirements begins within the first quarter of a minimum wage hike. Further, it results from both within-firm shifts in postings and across-firms shifts towards firms that sought more-skilled workers at baseline. Given the poor labor market outcomes of individuals without high school diplomas, these findings have substantial policy relevance. This possibility was recognized well over a century ago by Smith (1907), who noted that the “enactment of a minimum wage involves the possibility of creating a class prevented by the State from obtaining employment.” Further, negative effects may be exacerbated for minority groups in the presence of labor market discrimination.

So why do politicians push for higher minimum wages, when all the evidence suggests that vulnerable workers bear the heaviest cost?

Part of the answer is that they don’t understand economics and don’t care about evidence.

But there’s also a more reprehensible answer, which is that they do understand, but they want to curry favor with union bosses, and those union bosses push for higher minimum wages as a way of reducing competition from lower-skilled workers.

P.S. Here’s my CNBC debate with Joe Biden’s top economic advisor on this issue.

P.P.S. Here’s a rather frustrating discussion I had on the minimum wage with Yahoo Finance.

P.P.P.S. But if you’re pressed for time, don’t listen to me pontificate. Instead, watch this video.

Thank you so much for your time. I know how valuable it is. I also appreciate the fine family that you have and your commitment as a father and a husband.

Sincerely,

Everette Hatcher III, 13900 Cottontail Lane, Alexander, AR 72002, ph 501-920-5733

Williams with Sowell – Minimum Wage

Thomas Sowell

Thomas Sowell – Reducing Black Unemployment

By WALTER WILLIAMS

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Ronald Reagan with Milton Friedman
Milton Friedman The Power of the Market 2-5
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