Economic principles

Many of our lawmakers have forgotten or never learned some of the basic principles of economics. Imposing a higher minimum wage will cause many low-paid, unskilled workers to lose their jobs. Raising prices to support higher wages results in one or two things or a combination of both: higher-priced products and/or less products and services sold (some people will not pay the higher price). This means the employer must cut the cost of production to maintain an acceptable profit level, which usually means a reduction in workers or going out of business altogether, forcing more people into unemployment.

Now, for the unintended consequences of raising the minimum wage and the effect of low-paid, unskilled workers being laid off: First, unemployment benefits paid by the states increase until the benefit period expires. Former workers may qualify for government-sponsored Medicaid and other health coverage; may receive housing subsidies; and may even resort to criminal activity to provide some means of income. It is obvious the cost to not only the individual, but to society as a whole. Taxes will have to be raised.

Here is a specific example: An unemployed person cannot afford any health coverage so he/she goes to the emergency room after 5 p.m. for treatment of some ailment that might easily be treated in a primary care facility. The hospital cannot by law refuse treatment. So the visit is now billed at a price many times the cost of a typical office visit. The hospital has to eat the cost, so its rates go up; insurance companies have to pay out more; and cost of insurance to individuals goes up, which could lead to even more uninsured people.

Government intervention in any business relationship can cause unintended consequences. The government needs to stay out of commercial business operations and let the law of supply and demand work naturally.

RICHARD HARRIS

Conway