Obama’s Tariff On Low-Wage Labor
George Mason Professor of Economics Donald Boudreaux asks President Obama to justify his proposal for increasing minimum wages with his policy of inflating the price of imported goods with tariffs:
Dear Mr. Obama:
In this year’s State of the Union Show you called for the hourly minimum-wage to be raised from $7.25 to $9.00. That’s an increase of more than 24 percent. Because you trumpet this proposal as one to assist low-paid workers, you, presumably, deny that such a hike in the cost of hiring low-paid workers will prompt employers to hire fewer such workers.
In last year’s State of the Union Show you bragged of your administration’s increase in the tariff rate on Chinese-made automobile tires. This tariff increase, which averages 30 percent over three years, is explicitly designed to dissuade Americans from buying Chinese-made tires – an effect that you recognize and applaud.
Question: If a government policy that artificially raises the price of Chinese-made tires reduces the quantities of such tires that are bought, why does a government policy that artificially raises the price of low-skilled labor not reduce the quantities of such labor that are hired?
I’m told that you’re a man of science. I await your response.
Donald J. Boudreaux
Professor of Economics
The whole idea behind tariffs is trade protectionism. We inflate the price of imported goods so that people buy more domestically-made goods. The price changes, and our behavior changes with it.
So why wouldn’t we assume that the same is true of inflating the price of low-wage labor by increasing the minimum wage?Tags: Barack Obama, donald bousdreaux, Economy, jobs, minimum wage, tariffs