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INCREASING THE MINIMUM WAGE WILL NOT EASE THE POOR'S BURDEN

Economic theory is quite simple but yields powerful predictions. You don't have to be an economist to understand economics. It's easy. Say you commissioned me to do a study to make recommendations on how to eliminate Haitian poverty. Upon completion of the study, I tell you what's needed is for the Haitian legislature to enact a $7-an-hour minimum-wage law. That way, Haitians would no longer be poor. President Clinton and Department of Labor Secretary Robert Reich would probably compliment me on my findings, but you'd probably say, "Williams, you are a dope." You'd be right. If higher minimum wages were an effective anti-poverty device, world poverty would have been eliminated ages ago.

Minimum-wage proponents say higher minimum wages won't cause unemployment. The first fundamental law of demand, to which there are no exceptions, says when prices rise, people tend to buy less, and when they fall, people tend to buy more. After all, if people didn't respond that way, sellers could charge any price they wanted."Williams," you say, "but what can be done to raise people's wages?" Low wages are more a result of people being underproductive rather than underpaid. They simply do not have the skills to produce and do things their fellow man highly values. Seldom do we find poor highly productive individuals or nations. Those who earn low wages tend to have low skills and education. Our challenge is this: How can we make these people more productive? Raising minimum wages will not raise worker productivity; however, it can sabotage worker potential to acquire higher productivity.

Put yourself in the place of an employer, and ask: If I must pay Clinton's minimum wage of $5.15 per hour, does it pay me to hire a worker so unfortunate as to have skills enabling him to produce only $3-an-hour worth of value? Most employers would see that as a losing economic proposition and wouldn't hire such a worker.

Among academic economists, there is little or no debate over the unemployment effects of minimum wages. Our only debate is the magnitude of unemployment. Close to 90 percent of academic economists agree minimum wages cause unemployment especially for teenagers, particularly black teenagers.

People working at or near the minimum wage are exercising their best known alternative. Even though their income is meager, we shouldn't destroy that alternative just so we can feel good. The minimum wage and other regulations help explain why today's underclass has taken on a permanency not typical of yesteryear. The minimum-wage law is evil legislation and deserving of repeal altogether.