Caring, Justice, and Morality

The minimum wage goes up by 70 cents to $7.25 per hour today.

Tyler Cowen points out the benefit to employers for supporting an increase to the minimum wage though these same employers may already pay (well) above the minimum wage. And it’s not just the good publicity.

Note that I don't think that these employers are being dishonest in their support for "social justice" but I do think that it's easy to be in favor of the minimum wage when it doesn't cost you anything.

Indeed, these employers will benefit from an increase in the minimum wage because it will raise the costs of their rivals. This is why unions have typically been in favor of the minimum wage even when their own workers make much more than the minimum.

Good publicity, feeling good about yourself, and hurting your competitors. What’s not to like? I’d do the same thing if I were a businessman in that position. Yet it’s been known for decades that raising the minimum wage by fiat reduces the demand for labor, hence raising unemployment, especially among lower-skilled teenagers. This is yet another example of how individual actors will advocate their own best interest and reduce overall societal welfare.

I daresay we’ll see the same behavior and motivations manifested in the coming expansion of health care. Large employers, the vast majority of whom provide health care insurance for their employees, will support a mandatory health insurance or penalty tax on their competitors who don’t provide it. But the language will be all about caring, justice, and morality.