Raising minimum wage will only hurt the poor

President Obama called on Congress today to increase the minimum wage. Earlier this week Paul Krugman also called for an increase. Tomorrow there will be demonstrations across America organized by the Service Employees International Union (SEIU) and the union-backed advocacy group Fast Food Forward in support of raising the minimum wage for workers in fast food restaurants. Gee, I wonder if there is some coordination of message going on between Obama, Krugman, and the union thugs.

We are assured by Mr Krugman that absolutely no economic harm will result from raising the minimum wage:

[T]here are strong reasons to believe that the kind of minimum wage increase the president is proposing would have overwhelmingly positive effects. ... [T]he great preponderance of the evidence ... points to little if any negative effect of minimum wage increases on employment.

This is yet another case where you should believe your common sense rather than the Nobel laureate.

Just ask yourself: Who eats at fast food restaurants? One of the largest groups of customers is, of course, people who don't have much money, that is, the poor. If the minimum wage for workers in fast food restaurants is raised, the restaurants will simply pass this increase in wage expense along to their customers. So, the end result of raising the minimum wage for workers in these restaurants will be to make eating there more expensive for the poor.

Exactly the same analysis applies to raising the minimum wage in WalMart. Who shops at WalMart? Many poor people do. WalMart will pass along the cost of an increased minimum wage to its customers, namely, the poor. So, raising the minimum wage for WalMart employees will simply increase the cost of goods for the poor.

At best, an increase in minimum wage will result in a wash, since those who receive an increase in the minimum wage will likely also be patrons of the establishments where the wage was raised.

The economic bromides being peddled by Obama and company would be laughable if they weren't so tragic. Mr Obama's time in office has been characterized by stagnant economic growth brought about by the misguided Keynesian economic policies of his administration and the Fed. This economic malaise has been particularly damaging to the poor, who have fallen farther and farther behind while the 1% have grown richer and richer on the back of Keynesian stimulus. And yet, Mr Obama continues to try to sell the American people on economic policies that just hurt the poor and have no impact on the rich. After all, it is not the rich who eat Big Macs and shop at WalMart.