My response to another San Antonio Express-News Editorial on the minimum wage

I disagree with the editorial favoring an increase in the Texas state minimum wage ("A pay raise that pays dividends," Nov. 23). Some of the editorial was misleading and other parts used evidence very selectively.

First, let's look at why a person gets a job to begin with. If I offer you a wage of $10 per hour, I think you will generate at least that much in revenue. If you can't generate that much, I will offer less.

But with a legal minimum wage, anyone who is not capable of that level of productivity will never get hired. This raises a key question, which the editorial did not address, if workers get paid less than they are worth.

What business can afford to do so? Not many. Most employers are in competitive labor markets, especially retail and fast food, where minimum wage laws have their greatest impact.

If there is only one firm hiring labor, a monopsony, then workers get paid less than they are worth. But even Christina Romer, Obama's first chief economic advisor, said this is very rare.

The only conclusion is that a legally mandated higher wage will price some low skilled workers out of the market.

The editorial mentions some products whose prices have risen since 2009. So? The average annual increase in the Consumer Price Index was only 2.2%.

It also said "6.4 percent of Texas’ hourly workers earn minimum wage or less, well above the 4.3 percent nationally." But since December 2007 Texas has added 1.3 million jobs while all other states combined have 1.23 million fewer jobs.

Many other states have a minimum wage above the federal level. It looks like keeping ours at that level has helped create jobs.

Yes, some are low wage jobs. But Trinity University economics professor David Macpherson found that "two of three workers who take minimum-wage jobs obtain better-paying jobs within a year because of the job experience they gain."

By keeping the minimum wage low we give people a chance to get that first job which will soon lead to something better.

The editorial said it is a myth that raising the minimum wage is bad for business. It is hard to believe that raising labor costs 40% (about what an increase to $10 per hour would be) does not hurt business.

In fact, research on Canada suggests that in the long run there are job losses due to the new businesses that never get started because of the higher labor costs.

The paper also mentions that  "53 percent of all minimum wage earners are full-time workers and more than 88 percent are working adults."

But  economist Richard V. Burkhauser of Cornell University found that "only 11.3% of workers who will gain from an increase in the federal minimum wage to $9.50 per hour live in poor households." So it is not a good anti-poverty tool.

What about those workers who never get that first job from being priced out of the market? Research by economists Andrew Beauchamp and Stacey Chan of Boston College suggests that many of those workers turn to crime. Policies like minimum wage laws often have these unintended and unwanted consequences.

A minimum wage is paid for by either the customers, the firm (including any stock holders) or both. If you don't eat at McDonalds or own stock in McDonalds, you don't have to contribute to this government anti-poverty program.  

What workers need is a growing economy. In booming North Dakota, you can start at $17 per hour at the nation's busiest Wal-Mart in Williston.