Thursday, December 17, 2009

Minimal Thinking

The latest idea for increasing employment is to cut the minimum wage. The logic is that the less you pay people, the more you can afford to hire people and therefore more people will have jobs. Paul Krugman deals with it in his own inimitable style, but speaking as just a guy who has a job and who got a pay cut this year, unless everyone, including landlords, mortgage companies, credit card companies, banks, utilities, and everybody else also cuts what they charge to people who pay them, it’s a simply stupid idea.

And if you take the logic to its inevitable conclusion — the less you pay people, the more jobs there are — at some point we’re going to have everybody working and paying them nothing.