Minimum Wages, Raising Rivals' Costs, and Press Releases
Last week, David linked to a reprinted press release from Reuters titled “Business Owners Welcome White House Support for $10 Minimum Wage.” Here are a few thoughts:
1. I think the headline is meant to create mental disequilibrium for the readers, most of whom are likely wedded to the idea that business owners as a class are in perpetual conflict with workers as a class. If even business owners think it is a good idea, then it must be a good idea.
2. It’s most likely to be an exercise in raising rivals’ costs, as David points out. There’s a double dividend: not only do firms signing on to such things get less competition, they get to bask in the warm glow of public approval because of their enlightened practices. It’s a particularly insidious brand of evil because it takes advantage of the public’s economically-ignorant good intentions.
3. I propose another of Carden’s corollaries to Godwin’s Law: In any discussion of minimum wages, one participant will either appeal to Card & Krueger or claim that the disemployment effect of minimum wages is so small that there’s still a net transfer to workers. Perhaps, but competition for artifically-scarce employment opportunities erodes the value of that transfer. I explained it in a Forbes.com article over the summer.
4. One reason this caught my eye is that I got this press release from the same organization. David is right that the small print on the Reuters site is very small. Less-than-careful readers would likely read this and think it was a Reuters news story, or at least something that has been carefully vetted by Reuters journalists, rather than a press release written by an ideological organization.
4a. Perhaps I’m just naive, and maybe that’s what most “news” is. If so, it’s just one more reason to Avoid News.