In Favor of Raising the Minimum Wage? Georgia Tech Students Are!

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This is a friendly letter to Governor Jerry Brown and the California state legislators who voted for the $9.00 per hour minimum wage that went into effect on July 1st and that increases to $10.00 per hour on January 1, 2016.

Dear Governor Brown:

I’m sure that you and members of the California state legislature who voted to increase your state minimum wage to $9.00 starting July 1 have taken some heat from economists and business owners who have suggested that this may lead to increased unemployment among low-skilled workers. Well, I have a different, but related, message for you: here at Georgia Tech, we love ya, baby! We also love the socially-conscious legislators in Seattle and their $15.00 per hour minimum wage that kicks in next April, the Massachusetts legislators who are negotiating out an increase in their minimum wage to $10.50 per hour over two years or $11.00 per hour over three years, and, especially, our beloved President who is cheerleading an increase in the federal minimum wage to $10.10 per hour. In fact, we love everyone trying to raise the minimum wage. From our perspective, what’s not to love about mandating increases in pay for unskilled and low-skilled labor?

Now economists will tell you that raising the cost of labor creates economic incentive for firms to use more capital – there is no doubt that this is correct. But don’t be disheartened by this unhappy truth (remember, economics is the ‘dismal’ science). The much more important truth from our perspective is that the new technologies that firms will use in the future to produce goods and services instead of politically-priced, unskilled labor will be developed here at Georgia Tech! Just imagine – touch-screen ordering at fast-food restaurants and drone-delivered….everything! How about self check-out and payment at Walmart, grocery stores, home improvement stores, etc.? Oh yeah, we already have that, courtesy of past increases in the minimum wage. Demand for our students, whose university education emphasizes technology and innovation, will rise, which, in turn, will increase the average starting pay of our new graduates. In turn, this will induce even more students to apply for admission to our fine university. Think of the problems this solves and the opportunities it creates for you….

For starters, you are a hero to the few unskilled workers who actually get hired. Think of their votes! People who are out of work tend not to vote, so even if there is some piddling truth to the dis-employment effect of raising the minimum wage, you won’t suffer politically from it. In fact, there plausibly is great political advantage to you from swelling the ranks of unemployed – an increase in California’s poverty rate presents a time-honored stick to beat Republicans with and that, naturally, requires more government. Raising your minimum wage increases the incentive for children to drop out of school without completing their high school education. Another problem to blame on Republicans that requires……a government solution! And how about increasing the financial incentive for illegal immigrants to flood into the U.S.? You’re getting it now, I can tell – another issue to blame on Republicans and that can only be solved by bigger government. Finally, your best and brightest high school students can become our talented university graduates, commanding high salaries and starting a raft of new technology-driven firms here in Atlanta. Think of the cost-savings to the University of California system! You don’t want high-income, high achievers anyway – they create income inequality. Think of the political kudos you’ll reap by reducing income inequality in California! Think of the political hay you’ll make by railing against the evils of income inequality in Georgia! My God man, think what raising your minimum wage does to mitigate the effects of global warming – you’ll soon be mentioned in the same breath as Al Gore! Sorry – I got a little carried away there.

Well, here at Georgia Tech we love you and what you’re doing. In fact, we believe even more fervently than you do that raising your minimum wage is beneficial. Raise it more. Raise it faster. Do even more good. We hope you can feel the love. We’re even willing to be your punching bag on income inequality – such is the price of true love.

- David Laband