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.