NEW YORK (TheStreet) -- A minimum wage does more harm than good, and yet, we continue to hear from well-intended people that we should raise the minimum wage.
The latest call was in the Wall Street Journal, which had an opinion piece, "Time to Upgrade America's Miserly Minimum Wage" by Ralph Nader.
Proponents like Nader always start out their argument the same way: Divert the issue and pull at emotional strings by taking your attention away from the real issue. They choose a highly skilled and complete outlier in pay scale and crucify their hard work and the success that comes from it.
In the process, they essentially say the shareholders and board are too stupid to pay the CEO of their company the right amount of wages and they are overpaying. It's arrogant for Nader to suggest he knows better than the people who actually have their money on the line.The first error I find with Nader's opinion piece is the statement, "President Obama finally broke his four-year silence on this issue by calling for a minimum-wage increase in this year's State of the Union address". That's not entirely true, but Nader can be forgiven for not knowing about Obama's delaying of American Samoa's minimum wage increases.
The Fair Minimum Wage Act of 2007 was to increase the minimum wage of American Samoa's workers 50 cents per year until the minimum wage was equal to the rest of United States. As a result, some American Samoa's workers received an increase in 2009; however, shortly after, workers were laid off and unemployment increased to around 20%. After realizing the impact of the minimum-wage increase, Obama then signed a wage increase delay until 2015. That also happens to be after Obama leaves office. The U.S. Government Accountability Office reviewed the results of raising the minimum wage and found employment decreased as a result. For anyone who understands economics, this should not come as a surprise. The impact on American Samoa workers may not match the thesis of raising the minimum wage effectively, but it does fit in reality well. Sadly, reality doesn't curb the desire for proponents to provide all sorts half-cocked reasons to push forward.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV