I am writing in response to Steve Chapman’s recent column (“Economic Reality and the Minimum Wage,” Column, Dec. 15). Mr. Chapman gives a clear description of the price and demand relationship we all learned in Economics 101. It certainly seems clear that the lower the minimum wage, the more likely an employer is to hire. However, there is another part of demand which is need.
For instance, if I priced a 10 dollar hammer at only two dollars, most people would not run out a buy one because they don’t need another hammer. And no matter how cheaply you sell bags of garbage, you will have few takers.
Thus it is with hiring. Employers hire only when they need employees. This need is driven by the amount of business they have. If they don’t have enough business they don’t hire no matter what the wage is, and if the need is great they are willing to pay high wages in order to satisfy their customers.
The question becomes how do we increase business? We already know the answer. Business booms when there is a large middle class. And a middle class is created by paying good wages. We know this from our own history of the past 100 years.
What we have today is a shrinking middle class and a wealthier top 1%. Working people spend money keeping it in circulation. This is good for business. Wealthy people stash it foreign banks and keep it out of circulation. This is not good for business. We have people who work hard but do not make enough to feed their families or provide for their health needs.
As this happens we can either give these people food stamps and Medicare, which means the taxpayers pick up the cost that the large companies saved, or we can let these workers make it on their own until they decide to somehow fight back. Isn’t this what is starting to happen now in China, India and Pakistan where we sent work because it used to be cheaper?
— Jerome C. Yanoff, Chicago
