Economic Illiteracy In Obama’s $9 Minimum Wage Proposal

While watching President Obama’s State of the Union address, I got to thinking that maybe the source of Obama’s domestic policy has not been a place of malice, but of complete ignorance.

The moment of clarity came when he called for a raising of the minimum wage, saying, “Tonight, let’s declare that in the wealthiest nation on Earth, no one who works full time should have to live in poverty, and raise the federal minimum wage to nine dollars an hour.”

Obama seemed to truly believe that this proposal would be beneficial. Why announce so publicly a policy that is almost universally regarded as being economically disastrous if he did not think it would help people? It’s not as if he made this proposal to someone in private and then that person leaked it to the press. No, he was proud of his idea.

Aside from writing political columns, my other job is a bookstore clerk. It’s a very small place that sells old books, and there are only six or seven employees total. Each employee makes minimum wage ($7.25) or only a dollar more. My boss has told me that they would pay me more if they could afford it, but they can’t. My boss also adores Obama.

So a few minutes after Obama suggested a $9 minimum wage, I emailed my boss to tell him about Obama’s minimum-wage-hike proposal. I added, “If Republicans were so economically illiterate as to do that, it’d put sooo many small businesses, including [our bookstore], out of business. I’d love $9/hr, but not at the expense of my employer and thus at the expense of my job altogether.”

My boss wrote back, “But then you will have more to spend and maybe spend some of it on books. Think positive.”

Think positive? What an incredible thing to say. See, it doesn’t matter that the plan makes no sense; what matters is that Obama proposed it. Therefore, Democrats support it.

I wrote back to explain some very basic economic (and logical) truths: “The bookstore would be out of business if every employee were paid $9.00 an hour. Therefore there will be no books to buy. That’s reality. So we can either get paid $7.25 an hour, or not get paid at all because there will be no bookstore to get a paycheck from.”

He hasn’t written back.

After proposing a $9 minimum wage, Obama added, “This single step would raise the incomes of millions of working families.”

Raising the minimum wage will make businesses do one of three things: (1) reduce the number of hours that the store is open in order to save money; (2) fire some employees in order to save money; (3) go out of business altogether for failing to do either (1) or (2).

How can incomes go up when your business reduces store hours? How can incomes go up when employees get fired? How can incomes go up if your workplace goes out of business? In what land of the insane does Obama come from that he thinks people’s incomes would go up with a minimum-wage hike?