In an interview on NBC’s Meet the Press on Sunday, interviewer Kristen Welker pressed (pun intended) Donald Trump on whether he would raise the minimum wage. I’ve often said that Trump doesn’t show a basic understanding of economics. On this one, though, he did a first-rate job.
It’s only 2 minutes long so I won’t say much.
I will point out a few things though.
First, Trump notes that the huge increase in California for fast-food restaurants (he doesn’t mention fast food—he mentions restaurants) is wiping out some restaurants. He could have noted that that means some jobs were lost but I think that was implicit.
Second, Trump says that it doesn’t make much sense to have a high minimum wage for the whole country, given the disparity in cost of living. He gives as examples Alabama and Mississippi, where the cost of living is low. So the federal $7.25 an hour goes a long way.
Trump could have mentioned that even in those two southern states, only a small percent of people make the minimum wage and most make well above $7.25 an hour. He also could have then pointed out that that means that market forces drive wages above the federal minimum. It’s possible that that’s what he meant when he said that $8 or $9 an hour wouldn’t have much effect.
I’m used to economic illiteracy from politicians whether they are named Donald Trump, Joe Biden, or Alexandria Ocasio Cortez. So to see Trump make a number of important points in two minutes is refreshing. On the issue of the minimum wage, Trump explained things better than I’ve seen a major politician do in decades.
Note: It probably goes without saying but I’ll say it: Donald Trump understands that he cannot unilaterally raise the minimum wage. Congress would have to pass a law. I hope it doesn't. The right minimum wage, as a famous 1987 editorial in the New York Times put it, is $0.00.
The late, great Walter E. Williams, whom I described as the second smartest man in American behind Thomas Sowell, frequently wrote and spoke about "How Not to Be Poor". It's kind of the starting point for your other essay today about the millionaire next door.
1) Get your high school diploma as a minimum.
2) Be married before having children. Poverty among married people is close to zero.
3) Work. Two people working a 40-hour week at minimum wage will already be above the poverty level; and, as you say, few people remain at minimum wage for long.
4) Live below your means (save/invest/IRA/401(k)).
I understand how and why politicians and laypeople can claim and believe that the minimum wage is a good thing.
How can anyone who is an economist (the true hard leftist radicals aside) defend minimum wage laws? The most they could do is suggest that the harms are relatively small, yes? Because they would never today make the argument that it’s acceptable to sacrifice some at the bottom for the benefit of others - the one “utilitarian” claim you cite back then that might have at least the whiff of legitimacy.
And yet in fact many left-of-center economist do indeed defend it, and deny the downsides. This is baffling to me. How can they be so mal-educated?