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Worstall: Minimum Wage Should Be Set at Zero to Boost Hiring

Worstall: Minimum Wage Should Be Set at Zero to Boost Hiring
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By    |   Tuesday, 11 August 2015 06:00 AM


Tim Worstall, a fellow at the Adam Smith Institute in London, believes in a free market for labor, and that means he doesn't believe in a minimum wage.

"The correct level of the minimum wage is zero dollars per hour, simply because we shouldn’t be price fixing," he writes on Forbes.com.

Worstall's column comes as Seattle, San Francisco and Los Angeles have approved minimum wage increases to $15, and other city governments are discussing it too. The federal minimum wage is $7.25.

"The sensible way to deal with poverty and low income is to allow the market to work itself out, see what employers are willing to pay in various areas for various types and skill levels of labor," Worstall says. "And if there’s people left over at the end who do not have what we regard as a sufficient income, then we give them some money."

Thus the issue of low income should be addressed through the welfare system, not the labor market, he believes. Raising the minimum wage too high will only kill jobs for the poor, Worstall says.

Meanwhile, Washington Post columnist Robert Samuelson isn't so hot on the $15 level for a minimum wage, but he doesn't go as far as Worstall.

"Some increase in the federal minimum is justified," he writes. "It’s been at $7.25 since 2009. Inflation has eroded its value 10 percent since then."

So what's the problem with a hefty increase? "Raising it to $15 or even $12 would be a radical act that front-loads the benefits and back-loads the costs," Samuelson says.

Job losses would mushroom, he argues. "Some companies would become unprofitable and shrink or close. Others would automate. Some start-ups would be scrapped."

As for how many jobs would be lost, the American Action Forum, a right-leaning think tank, estimates it would be 1.3 million for a $12 minimum and 3.3 million for a $15 minimum.

And unfortunately, "the least-skilled workers might suffer the largest losses, especially if higher wages draw experienced people back into the labor market," Samuelson says.

In the latest jobs numbers, non-farm payrolls rose 215,000 in July, and the unemployment rate stayed at a seven-year low of 5.3 percent.

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Tim Worstall, a fellow at the Adam Smith Institute in London, believes in a free market for labor, and that means he doesn't believe in a minimum wage.
minimum wage, pay, salary, jobs
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2015-00-11
Tuesday, 11 August 2015 06:00 AM
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