Tags: Schiff | abolish | minimum | wage

Schiff: Don't Raise Minimum Wage, 'Completely Abolish' It

By Dan Weil   |   Monday, 18 Feb 2013 08:37 AM

President Barack Obama’s proposal to raise the minimum wage to $9 an hour from $7.25 is silly and would be counterproductive, says Peter Schiff, CEO of Euro Pacific Capital.

“The president has had a lot of stupid ideas, but raising the minimum wage has to be among the stupidest, if not the stupidest,” Schiff tells Yahoo.

"It's not going to lift the wages of workers. What it's going to do is diminish employment opportunities."

Editor's Note: Economist Warns: 50% Unemployment, 100% Inflation Possible

Unskilled workers need a first job to get themselves going in the workforce, and now Obama wants to make that more difficult, Schiff says. “This isn’t going to create jobs.”

The last thing you want to do in an economy with 7.9 percent unemployment is “to make hiring people more expensive,” he says. “You need to bring down the cost of hiring people with lower regulation and lower taxes.”

Can anything be done beyond that?

“We should completely abolish the minimum wage,” Schiff says. “We didn't have a minimum wage for most of American history.” The minimum wage began in 1938. “It was a bad idea, and we ought to admit that it was a bad idea,” Schiff says.

Harvard economist Greg Mankiw argues that establishing a minimum rate of $9 an hour is arbitrary.

“How did they decide that $9 per hour is the right level? Why not $10 or $12 or $15 or $20?” he writes on his blog.

“Presumably, the president's economic team must believe that the adverse employment effects become sufficiently large at some point that further increases are undesirable. But what calculations led them to decide that $9 strikes the right balance?”

Editor's Note: Economist Warns: 50% Unemployment, 100% Inflation Possible

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