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2007 Ron Paul Chapter 10

Not linked on Ron Paul’s Congressional website.

Congressional Record [.PDF]

Against Raising The Minimum Wage
10 January 2007

2007 Ron Paul 10:1
Mr. PAUL. Mr. Speaker, the announced purpose of H.R. 2 is to raise living standards for all Americans. This is certainly an admirable goal, however, to believe that Congress can raise the standard of living for working Americans by simply forcing employers to pay their employees a higher wage is equivalent to claiming that Congress can repeal gravity by passing a law saying humans shall have the ability to fly.

2007 Ron Paul 10:2
Economic principles dictate that when government imposes a minimum wage rate above the market wage rate, it creates a surplus “wedge” between the supply of labor and the demand for labor, leading to an increase in unemployment. Employers cannot simply begin paying more to workers whose marginal productivity does not meet or exceed the law- imposed wage. The only course of action available to the employer is to mechanize operations or employ a higher-skilled worker whose output meets or exceeds the “minimum wage.” This, of course, has the advantage of giving the skilled worker an additional (and government-enforced) advantage over the unskilled worker. For example, where formerly an employer had the option of hiring three unskilled workers at $5 per hour or one skilled worker at $16 per hour, a minimum wage of $6 suddenly leaves the employer only the choice of the skilled worker at an additional cost of $1 per hour. I would ask my colleagues, if the minimum wage is the means to prosperity, why stop at $6.65 — why not $50, $75, or $100 per hour?

2007 Ron Paul 10:3
Those who are denied employment opportunities as a result of the minimum wage are often young people at the lower end of the income scale who are seeking entry-level employment. Their inability to find an entry-level job will limit their employment prospects for years to come. Thus, raising the minimum wage actually lowers the employment opportunities and standard of living of the very people proponents of the minimum wage claim will benefit from government intervention in the economy.

2007 Ron Paul 10:4
Furthermore, interfering in the voluntary transactions of employers and employees in the name of making things better for low wage earners violates citizens’ rights of association and freedom of contract as if to say to citizens “you are incapable of making employment decisions for yourself in the marketplace.”

2007 Ron Paul 10:5
Mr. Speaker, I do not wish my opposition to this bill to be misconstrued as counseling inaction. Quite the contrary, Congress must enact an ambitious program of tax cuts and regulatory reform to remove government-created obstacles to job growth. However, Mr. Speaker, opponents of H.R. 2 should not fool themselves into believing that adding a package of tax cuts to the bill will compensate for the damage inflicted on small businesses and their employees by the minimum wage increase. Saying that an increase in the minimum wage is acceptable if combined with tax cuts assumes that Congress is omnipotent and thus can strike a perfect balance between tax cuts and regulations so that no firm, or worker, in the country is adversely affected by Federal policies. If the 20th Century taught us anything it was that any and all attempts to centrally plan an economy, especially one as large and diverse as America’s, are doomed to fail.

2007 Ron Paul 10:6
In conclusion, I would remind my colleagues that while it may make them feel good to raise the Federal minimum wage, the real life consequences of this bill will be vested upon those who can least afford to be deprived of work opportunities. Therefore, rather than pretend that Congress can repeal the economic principles, I urge my colleagues to reject this legislation and instead embrace a program of tax cuts and regulatory reform to strengthen the greatest producer of jobs and prosperity in human history: the free market.



















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