When costs increase, demand falls. That's the law of demand, on which almost the whole study of economics is based, and until somebody figures a way to repeal it, it explains why the increasing the minimum wage is a disputable idea. Labor is the most expensive component of most businesses. If you force businesses to pay more for labor, they will figure out a way to use less of it, or to increase the prices of their goods and services to make up the difference. Naturally, it's at the top of the Democratic agenda for the next session of the Indiana House:
House Democrats will introduce a proposal in the incoming General Assembly to increase Indiana's minimum wage to $7.50 an hour.
Rep. John Day, D-Indianapolis, who has introduced minimum-wage legislation several years running, said his latest bill would increase the hourly rate from $5.15 per house in three stages: to $6 by next September, to $6.75 by March 2008, and to $7.50 by September 2008.
Actually, though increasing the minimum wage is a bad idea, proposing it right now is just short of brilliant. Either, 1) The House will OK the minimum wage, but Senate Republicans will block it, allowing Democrats to say mean things about the GOP next election time or, 2) The Democratic-controlled Congress will make the issue moot by passing its own version ($7.25, I believe), which is the kind of thing President Bush is not likely to veto. In either case, Democrats get to please their base without actually having to contemplate the possible consequences of their actions.
