The Sensible Conservative Responds

In last week’s posting, the Sensible Conservative hosted a column by an old friend with contrary views on the wisdom of raising the minimum wage.

The California Capitalist, as he termed himself, argued, in essence, that raising the minimum wage would lead to improved social stability for us all.  Both crime and welfare rates would decline as would the taxes that would otherwise be required to fund law enforcement and support payments.  Implicit in that prescription is a belief that there is a correlation, for instance, between crime rates and minimum wage levels.  However, there is not.

Since the 1960s, the minimum wage level has kept up roughly with inflation.  This has been accomplished by periodically raising the wage floor.  During this time frame, the minimum wage averaged around 40% of the private sector rate.  If there were a significant relationship, between the crime rate and minimum wage levels, one would expect that the national crime rate during that fifty year period to be approximately stable as well.

It was not.

In 1960, there were about 2,000 crimes per 100,000 residents.  Between 1975 and 1995, this rate was more than 150% higher (5,000-6,000 for 100,000 residents).  Today’s rate is lower but remains double that of 1960.

 

These statistics, of course, do not prove that increasing the minimum wage will have no impact on those who are deciding whether to commit a crime or take a job.  But they certainly raise the question as to how many might be effected.

[Welfare statistics highlight the same concern.  Those on the public dole are a far higher percentage of our population than was the case in 1960.  The loosely constant minimum wage level can hardly be cited as a major contributor to that fact.]

None of this is to suggest that the objectives of the California Capitalist are unworthy.  It’s just that his solution won’t get us there.

As a conservative, I know that culture matters in determining conduct.  As a capitalist, I recognize that economic incentives are important.  But I am suggesting that the former has been more important than the latter in shaping the predicament of, as the California Capitalist terms them, “unskilled, untrained, not very smart people.”

I suggest that cultural changes over the last fifty years in attitudes toward work and welfare dependency bear a major responsibility.

Would that this problem could be solved by such a simple measure as raising the minimum wage.  Alas.

A Reality Check on Economic Facts of Life:  Competitively set income levels reflect an individual’s economic worth for the task performed.   The market place places a higher value, for instance, on the construction worker making $15.00 per hour than the burger-flipper making $10.00.  Don’t you think the economy will adjust the construction worker’s wage proportionately higher? And on up the ladder the higher wage rates will climb.  Thus, increased costs will ripple throughout the economy.  As a result, inflation will most likely return everyone to their relative economic position occupied before the minimum wage hike was instituted.  The improvement of the lot of the minimum wage worker will have proven to be ephemeral.  Here’s a simple rule that is true:  One cannot produce economic prosperity by fiat.