Posts Tagged ‘economic incentive’

Why the minimum wage should be $15 an hour

April 15, 2015

CRminimumwage8dXSp

The key economic problem for the USA is that American wages are too low.

American consumer demand is the engine that has driven not only the U.S. economy, but much of the world economy, for the past 60 years.

If people don’t have enough money to buy things, there is no economic incentive to make things.

If there is no economic incentive to make things, the world’s wealth does not increase relative to the population.

If there is no economic incentive to make things, rich people and institutions invest in debt, which in the long run makes the problem worse.

If there is no economic incentive to make things, unemployment increases.

There is an economic theory that says that the way to cure unemployment is to allow wages.

It is true that, in a generally prosperous economy, an individual employer might hire more workers if they were available at a lower wage.  But that wouldn’t work for the economy as a whole because workers are customers.  Without mass prosperity, economic activity is devoted to serving the desires of a tiny economic elite.

One way to wage raises is to raise the minimum wage.  This is good for all working people, not just those earning minimum wage or slightly above.  It pushes up the general wage level and increases the market for goods and services.

And aside from all these other considerations, do we really want to live in a rich nation in which millions of hard-working people are poor?

(more…)