Don Boudreaux\’s interesting point

So, let us compare the proposed rise in hte minimum wage in the US with the cut in government spending in the US.

A 3% cut in planned future expenditure is a disaster. A 24% rise in input prices to business is something they\’ll just suck up with no problem.

We might ask the same question in the UK in fact. No cuts in total government expenditure are a disaster. But a 20% (or whatever) rise from the minimum wage to the living wage is not a problem.

Umm, yeah, right on really.

In fact, shouldn\’t the Today Programme be asking that second question somewhat forcefully?

2 thoughts on “Don Boudreaux\’s interesting point”

  1. Don’t worry; raising wages will ensure they can recruit the best quality staff, prevent those potential employees going abroad in search of higher wages, and all that.

    Okay, being less snarky; why do we believe that the economy is improved by white collar wages rising and blue collar wages falling? Is this really a good general principle?

  2. But most workers in the US make much more than the minimum wage, and businesses have lots of inputs other than labor. So what is real rise in “input prices to business”? Something like 1-2%, maybe?

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