Americans believe anything that feels like it should be true and, as a nation, know absolutely dick about economics. Thus bits of folk wisdom based on an Econ 101-level understanding of macroeconomics quickly rise to the status of gospel truth – half urban legend, half unadulterated bullshit. The Federal minimum wage is set to rise to $7.25 on Friday and, as we all "know," raising the minimum wage makes jobs disappear.

Whenever Americans appear to be at risk of forgetting this kind of wisdom, a corporate-backed front group emerges with a marketing campaign to ram home the point. The "Employment Policies Institute," which pitches itself as a think tank (while the media happily play along) but is actually a lobbyist- and business-funded anti-living wage group, fills that role today. Their point is simple. The money in our economy represents a zero-sum game; if wages must go up, the number of jobs sharing the finite pool of cash available for wages must decrease. Write that on the final exam and revel in your C-. Then get a job writing syndicated financial columns with your sophomoric logic.

Disregard the fact that half of the states already have the $7.25 minimum and there is not the slightest bit of evidence that any state or Federal minimum wage hike in the past led to job loss. Why, in the zero-sum game, must the variables be limited to the number of jobs and the minimum wage? If the number of employees and hours worked at a business are held constant, then the cost of employing a minimum wage workforce will increase. Why must that result in job loss? Why can it not result in a 10 cent price increase on your Whoppers Junior? Why can it not result in a seven-figure bonus for the higher-ups instead of an eight-figure one? Why can the cost not be recovered from other non-wage costs of operating the business?

None of those scenarios can be proposed because the purpose here is not, and never has been, to discuss the role of labor costs in the economics of operating a business. The purpose is to scare ignorant or desperate people into thinking that they will lose their job of they don't speak up to protect the boss's right to pay them like illegal immigrants. As the current marketing campaign to this effect is speaking out against a wage hike which has already been signed into law, I'm guessing that understanding the relationship between wages and job supply is not the only aspect of economics that the Employment Policies Institute and its followers fail to grasp correctly.

15 thoughts on “THE ZERO-SUM GAME”

  • It takes a special kind of asshole to bemoan a infinitesimal increase in minimum wage. But we all know someone who is wearing out the carpet over it.

  • Did you choose the Whopper Jr. as your example just so you could exercise internal pluralization? FRICKIN' AWESOME!

  • What kind of dick do you have to be to name your place "Employment Policies Institute" to purposefully confuse others by thinking it is the real EPI – Economic Policy Institute?

  • At this time of rising unemployment, everything unwanted by the business lobby will be labeled as a job-killer. Already, the stimulus (at the not yet 10% imposed point) is being labeled a failure for it's lack of job creation. More and more evidence that the business lobby is just like those guys who want to sell gold: every economic climate is the right time, but right now is when you should be listening most.

  • Purely personal response, as I am one of those people who know dick about economics. I was paid $7.00 an hour when I was interning, and I barely survived. That was 10 years ago. How in hell anybody working 50-60 hours a week is supposed to make it on $7.25/hr. mystifies me. Shame on all those rich asshats who begrudge the working poor a living wage.

  • Thought the same thing after reading the post, Mike. What jackasses.

    The author of the link Ed posted, Peter Schiff, is by all means a moron. Just look at his wikipedia page:

    "Peter Schiff is a supporter of the Austrian School of Economics and the Ludwig von Mises Institute…"

    One could stop right there and know that Schiff has no fucking idea what he's talking about. The Austrian School is in the same territory as the Laffer Curve: it's fucking bullshit. But let's not stop there:

    "…and was an economic adviser for Ron Paul's campaign in the 2008 Republican Party primaries, through which Schiff also expressed support for sound money, limited government, and free market capitalism."

    Enough said.

  • But if you would just get government out of the way of the market, evrything would be great: plenty of jobs ( that pay 16 cents an hour), full employment ( kids get to work 15 hour days, too), and happy employees ( the ones who grumble are fired, blacklisted, and if they try to organize, killed).
    The economic model the U.S. elite wants is a third world one- a few ultra- wealthy families controlling the uneducated and brutalized masses who are too hungry and frightened to fight back.

  • Spot-on, Ed. This sort of thing is exactly the same reason the age-old question always goes unanswered, or misdirected to something about the unions. If the company is doing poorly, how about we knock a figure or two off of the CEO and Board's salaries/bonuses and keep those couple thousand workers we were going to lay off? After all, the folks at the top aren't going to miss that money — in practical terms, of course; emotionally they will — while the folks at the bottom are losing their livelihoods.

    But job cuts aren't about preserving the company. They're about preserving the executives' lavish lifestyles. In much the same way, saying that X is going to be a job-killer isn't about saving the company — it's about saving executive graft and excess. There are plenty of ways other than reaping jobs with a scythe to recover the loss.

  • Sometimes, I think there is a small group of people who resent the French and American Revolutions for messing up 'the good old days', when you could simply trample a peasant who did not bow fast enough.

  • Thanks, as always. It's a constant source of amusement to me that everyone, not just the vacant idiots who do the news, doesn't just ask one question whenever anybody makes a claim – "Do you have any evidence for that?" I mean, routinely disbelieving claims, especially when the "claimer" has a vested interest in it, may mean that you're wrong once in a great while, but as a rule, it will lead you in the right direction.

  • JohnR: …not just the vacant idiots who do the news… In late-capitalist societies, the news media's real job description is to move product — Viagra, pick-up trucks, cheap beer — not to inquire, assess evidence, and discover the truth. They have blogs for that.

  • Wouldn't another possibility be that, I don't know, people might have some more money to pump into the economy, which would then make the economy better?!?

    Then again, that huge amount of extra money from the increase will probably only buy another bottle of ketchup or a box of saltines. $7.25 isn't a living wage.

  • Aslan Maskhadov says:

    Look folks, they're never going to pay you a living wage, unless someone makes them. The government isn't going to make them, because they are in the pay of the businessmen. So you aren't getting a damn thing unless you're willing to take it from them.

  • To Comrad X's point: I've wondered for a long time whether the "Conservative" model of society is a So. American banana republic, or 13th century European feudalism.

    Chris – Why don't you think that ALL the time?

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