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Kansas minimum wage: wrong questions

A recent letter in the Wichita Eagle asks these questions: “Who would work for $2.65 an hour? State legislators don’t get paid much, that is true. But would they work for $2.65 an hour? Would they send their sons or daughters to a job that paid that little?”

These questions are intended to stir up sympathy for low-wage workers in Kansas. It is, indeed, not a good situation when someone has such low productivity that they can’t command a very high wage.

But passing a law can’t fix that.

A related comment left on this blog asks these questions that help answer those above: “What do business owners do when their costs go up? They pass the increase along to consumers.”

This is not necessarily true, however. If business owners felt they could increase their prices, they would do so now, and earn greater profits. Generally, when prices are increased, sales go down. Demand for labor may decrease, too, and that’s a big problem for workers.

The writer claims that the 20,000 Kansans presently working for the Kansas minimum wage will have their lot improved if Kansas raises its minimum wage. That will be true for those who keep their jobs. Undoubtedly some, perhaps many, will lose their jobs. It would be a miracle if that didn’t happen.

The writer also asks “Why not let the poor have more money?”

This is a wrong question again. I don’t think anyone is against “letting” people have money. But for sustainability, wages have to be earned.

I’m sure this writer is genuine in his concern for law-wage workers in Kansas. Fixing this problem, however, requires steps that are harder to take than simply passing a law.

One way to increase workers’ productivity is through education. Unfortunately, there is ample evidence that our public education system is failing badly. Even President Obama said so last week, although his prescriptions for fixing schools don’t go far enough.

Capital may be a dirty word to some. But as the economist Walter E. Williams asks, what is the answer this question: who earns the higher wage: a man digging a ditch with a shovel, or a man digging a ditch using a power backhoe? The difference is that the man with the backhoe is more productive — and earns more, too. That productivity is provided by capital — the savings that someone accumulated and invested in a piece of equipment. That increases the output of workers and our economy. Workers can be paid more.

Education and capital accumulation are the two best ways to increase the productivity and the wages of workers. Ironically, the people who are most vocal about raising wages through legislative action are also usually opposed to meaningful education reform and school choice. They usually insist that more resources be poured into the present system. They also usually support higher taxes on both individuals and business, which makes it harder to accumulate capital. These organizations should examine the effects of the policies they promote, as they are not in alignment with their stated goals.

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