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May 2, 2017

Minimum Wage Increases: Venezuela's--and Democrats'--Anti-Poverty Solution


What happens when a country’s president fails to restore economic growth and millions of citizens see their earnings stagnate or fall, igniting populist revolts for change? That president usually turns to demagoguery and demands for an increase in the minimum wage.  

Hence former President Barack Obama and would-be presidents Hillary Clinton and Bernie Sanders. 

Oh, and Venezuela’s avowed socialist President Nicolas Maduro. 

Maduro has made minimum wage increases a hallmark of his failed presidency—and the country’s failed economy. 

  • Then he gave a 20 percent increase in May of 2015, followed by a 10 percent increase in June. 

  • In September of 2016, Maduro ponied up another 50 percent wage increase, and 40 percent the next month. 

Note to like-minded socialist Bernie Sanders, who keeps calling for a $15 minimum wage (to start), and other Democrats: If raising the minimum wage made low-income workers better off, there would be no poor Venezuelans. 

But these days almost every Venezuelan is poor—except for the president and his cronies. 

Obama was unable to push through a huge federal minimum wage increase because the Republican-led Congress still had the constitutional power to stop him. But if Obama had the power to bypass Congress on the minimum wage, he likely would have done it. Indeed, he signed an executive order in February 2014 requiring federal contractors to do just that. 

But raising the minimum wage doesn’t eliminate poverty. In fact, large minimum wage increases—like those in Venezuela and what Democrats would like to pass— exacerbate poverty because many employers cannot afford to pay lower-skilled employees that much.  

The best way to raise incomes is for a president to embrace policies that spur economic growth. That usually means lower taxes, especially on business and capital, and lite-touch regulations. 

President Maduro has taken the opposite approach—and so have many Democrats.


  • TaxBytes-New

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