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Most Economists Do Not Support an Increase in the Minimum Wage

May 17, 1987

Harry Bernstein's column on the "minimum pay debate" hits home since I employ many people who could be affected by the issue. At a cost to myself and my company, I pay some of my employees more than the minimum wage because I regret that many of these young men and women have left school without the necessary skills to hold meaningful work, let alone protect themselves in the marketplace.

Of course, the problem with this is that I have to price my product higher and lose sales. Why? Because consumers don't know what I'm doing, so they buy lower-priced products from my competitors.

I wish we could simply raise wages to help the poor. The fact that someone has to work at minimum wage indicates that the person either does not possess adequate skills or the occupation he or she wants is flooded with job applicants. I know how discouraging it can be for a worker to see a person who obviously has a lot of wealth, and wonder: "Why not me?"

This issue cannot be solved, however, by simply raising the minimum wage. Granted, in the short run, some people could stay off government aid if the minimum wage is increased. But what would happen in the long run? Can we afford to subsidize people this way?

If the last 20 or 30 years proves anything, it's that government subsidies don't work. We are left with people who possess the poorest of skills.

I am going to work very hard as a businessman to improve our educational system here in California so that every student, regardless of background, can at least have a chance for economic freedom.



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