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Obama’s own former adviser gives thumbs down on pushing up the minimum wage

Here is a thoughtful critique of the President’s minimum wage proposal, and this is from his former Chair of the President’s Council of Economic Advisers, Christina Romer that appeared in the New York Times on 3-2-13.  Of course, a few days ago, I posted this piece on the minimum wage here on Bastiat’s Bastions.  So, even one of the President’s most widely respected advisers, a long-time liberal economist, says there are better ways to help the poor, if that is the goal.

-MC

7 Responses to “Obama’s own former adviser gives thumbs down on pushing up the minimum wage”

  1. DP says:

    I’m going to speak from experience. I personally believe that minimum wage should be risen. During the summer I worked at a fast food restaurant and was only getting paid 7.25 and hour. I feel that from dealing with customers and the service we provided that we should get paid more. The only problem some companies would face is not having enough capital to pay everyone and that would cause a lot of workers to lose their job. I still believe that government should find a way to compromise with raising minimum wage and keeping jobs for workers.

  2. Jontue Hawthorne says:

    Seeing the recent trends, and the way businesses operate. Increasing the minimum wage up with raise prices, or increase unemployment. If a company can’t raise prices to cover this they will start laying off to make up for having to pay more.

  3. Paul says:

    As Ms. Romer mentions in her opening lines, “Raising the minimum wage…tends to be more popular with the general public than with economists.” And why wouldn’t they? The populace is generally uniformed about economics and is concerned with the “now”. They see an increase to their wages and, while this is an increase to their salary in this instant, they fail to realize that the prices of goods will rise to meet this increase in wages. It’s all relative: the government tomorrow could declare that the minimum wage will be increased tenfold (to the ignorant’s great glee) but prices will also increase proportionally.
    Proponents of the federal minimum wage postulate that it helps the poor, but in reality, this does not seem to be the case. This “redistribution of wealth” can be better served by increasing EIC. It doesn’t affect everyone because it is based on income, so those in higher tax brackets don’t get the benefits, which clearly they do not need. By increasing EIC, there is more motivation for the population to work more, reducing the number of people on unemployment and decreasing welfare payments.

    • SP says:

      I agree raising minimum wage might not be the effective answer. As much as exciting it sound, raising minimum wage does have consequences. Workers get excited that they will be making more money and have more saving but then they fail to realize that increasing the minimum wage means increased cost for firms to manufacture products which will have an indirect impact on them. Since, the production cost increases, the firm tries to combat it by increasing the price which is hard on the consumers. Moreover, the firms will also start to lay off their employees to reduce their cost such that it will raise the cost for the society overall.

  4. MPC says:

    I do agree in the fact that minimum wage is a great idea since companies pay workers no less of what they deserve for their hard work. But increasing is not a solution to help the economy, there are several ways to help the economy like increasing other type of taxes or changing the retirement age. It was expected to see a disagreement on changing the minimum wage since this is not the only solution that it needs to be consider to change the economy, is actually predicted to increase debt instead of helping it.

  5. Gabrielle Stinchcomb says:

    Since I am a college student, I definitely wouldn’t mind the minimum wage being risen. Who doesn’t want more money in times like this? However, you have to look at the big picture. Raising minimum wage could help lower class because they would earn more money, but it could harm company’s longevity. Many business now are already struggling to pay their employees. If they are forced to pay their employees more, this could cause them to slowly run low on funds and potentially lead to closing. This debate is a toss up because raising could be good for workers, but it could also be bad for employers.

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