An Economics Lesson from the Star Tribune

This morning’s Minneapolis Star Tribune ponders those inscrutable laws of economics in the context of the prospective increase in the federal minimum wage. As though it were news, the Strib observes that the increase will affect very few Minnesota workers:

Dustin Yewell is trying to save money for college by working at Javalive, a coffee shop and bakery in Faribault, Minn., where the 19-year-old gets $6.25 an hour plus tips.
“I was working two jobs near minimum wage,” Yewell said. “But I just quit my second job at Godfather’s Pizza to work here.”
By state law, Javalive’s owner, Ken Beck, is required to pay his employees only $5.25 an hour. But Beck has found that he needs to offer more to attract good workers in a tight market.
Beck isn’t alone. Only a tiny fraction of Minnesota workers would be affected by the planned increase in the federal minimum wage, which would be phased in by the summer of 2009.

That’s the history of the minimum wage; it generally trails behind actual wage increases that are enabled by productivity and dictated by the labor market. It doesn’t do much harm, as long as, at any given moment, it is lower than what low-skilled employees are already earning. The point when I knew the current increase wouldn’t do much damage was when I walked into a McDonald’s in a small town in southern Minnesota that had a sign on the door: “Help wanted, $7 an hour.” That was pretty typical:

“We don’t hire anyone at minimum wage,” said Kay Butler, who owns eight McDonald’s franchises in Eagan, Savage, Cannon Falls and Farmington. “Our 14- and 15-year-olds start at $6.50, for competitive reasons.”

There is something the government could do that would have a real impact on the wages of low-skilled Americans: stop the influx of illegal immigrants. One of these days, the Star Tribune might take note of another law of economics, the one that says that if you increase the supply of something–here, low-skilled workers–you depress the price.
The truth is, though, that there is no lobby in Washington on behalf of low-skilled workers. The Democrats like cheap labor just as much as the Republicans. They like to eat out, and they don’t expect their children to become roofers. So they dress up their support for illegal immigration in tones of moral superiority, while using the old dodge of the minimum wage to keep up the pretense that they are looking out for the little guy.
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