By Tom Quiner

DownloadedFileThe minimum wage divides liberals and conservatives.

I present a modest proposal on how to determine the minimum wage: simply adhere to the Constitution and abolish it at the federal level.

Keep in mind, the minimum wage wouldn’t go away. States would be free to continue setting their own minimum wage at whatever level they thought best for their citizens.

What business, though, is it of the federal government anyway? Some say their authority to set the MW is vested in the Commerce Clause of the Constitution which allows them to regulate interstate commerce.

What does the minimum wage have to do with interstate commerce? It is a stretch.

If the feds get out of the way, states are free to better serve their own citizens. They are closer to the economy in their area. Even more, it would create a healthier economic climate by encouraging increased competition between states.

States with a higher wage might be able to attract more and better workers.

States with a lower wage might be able to attract more new business start ups seeking lower labor costs.

There is a direct correlation between a higher minimum wage and higher unemployment rates. Back in May of 2009, the five states with the lowest unemployment rates had a state MW lower than the federal wage.

But five of the six states with the highest unemployment rates had a higher MW wage than the feds.

The federal government should get out of the way and let individual states determine what is best for their citizens.

 

10 Comments

  1. Tom Maly on February 25, 2013 at 7:27 pm

    Alas, Thomas, there are any number of things that the federlistas have taken control of that are indeed the responsibility of state government (can you say federal department of education!??!). i agree that MW is among those responsibility that belong with the states.

  2. johnhaskell on February 26, 2013 at 8:18 am

    “There is a direct correlation between a higher minimum wage and higher unemployment rates. Back in May of 2009, the five states with the lowest unemployment rates had a state MW lower than the federal wage.

    But five of the six states with the highest unemployment rates had a higher MW wage than the feds.

    The federal government should get out of the way and let individual states determine what is best for their citizens.”

    Then how do you square what you said with this data (compiled since the late 1960s):
    All-time M/W high–1972 at $9.33/hr, and U/E was 4.5%
    All-time M/W low–1993 at $7.65/hr, and U/E was 6.2%
    All-time U/E high–2010 at 9.0%, and M/W was $8.75
    All-time U/E low–1968 at 2.7%, and M/W was $8.68
    (M/W in constant, 1982-1984 dollars) (U/E rate for 20 y/o+)

    The theory that increasing M/W will increase U/E is usually argued from some basis of marginal cost of production theory. In that case, how is that the M/W has declined in real dollars since the late 1970s, real wages have stagnated since that period, yet productivity per worker has shot through the roof. In other words, if marginal cost of productivity were argued consistently, and applied consistently (and just when businesses want to point out their production costs will increase prices), then we should see M/W near the $15 range by some estimates.

    • quinersdiner on February 26, 2013 at 4:28 pm

      If the market rate is already greater than the minimum wage, then an increase in the minimum wage won’t affect employment rates, until the MW exceeds what the market place says low skill workers are worth. Why not increase the MW to $15? Because low skill workers worth less than $15 per hour will find that their job opportunities will shrink. Thanks for writing.

  3. JTHmishmash on February 26, 2013 at 10:05 am

    I like the idea, just because I’m hoping my state would remove the minimum wage. Worst economic policy ever.

  4. […] A modest proposal on how to determine the minimum wage (quinersdiner.com) […]

  5. olemike on February 26, 2013 at 11:16 am

    Eliminating the Federal Government’s role would help in many areas. Unfortunately, adhering to the constitution seems to be a thing of the past.

  6. tannngl on February 26, 2013 at 4:10 pm

    Who’d have thunk?
    Competition!
    What a great idea!

  7. ockraz on February 27, 2013 at 12:03 am

    “A modest proposal on how to determine the minimum wage”

    Given the title I was disappointed at the lack of cannibalism 🙁

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