Minimum Wage and Why Bill O’Reilly Doesn’t Understand Economics

by Dr. Gerard Emershaw

In a recent Talking Points Memo on his show, Bill O’Reilly discussed things he believes the GOP must do to improve the economy now that the party will be in control of the Senate as well as the House. A few of his ideas were undeniably good. For example, he suggests that the Republican Congress lower the corporate tax rate. He correctly recognizes that lowering corporate taxes could very well led to more jobs being created and aptly states: “When there are more jobs, there is more competition for workers and salaries go up.” Unfortunately, almost immediately after this, the Fox News Channel host suggests the following:

Third, raise the minimum wage.  That will encourage young people to get into the marketplace and other folks to get off the dole. Ten bucks an hour will not break anyone.

And with the corporate income tax cut, the minimum wage rise will not affect profits.

Bill O’Reilly’s ignorance concerning economics is breathtaking. First, he is under the impression that all employers pay corporate tax. The true machine for economic growth in the United States is made up of small businesses. A large number of small businesses are owned by people who pay taxes on their business profits as part of their individual federal income tax. Lowering corporate taxes would not help these small business owners. Raising minimum wage while simultaneously lowering corporate income taxes will benefit big business at the expense of small businesses. It will become yet another corporatist program aimed at crushing the small business competitors to large corporations.

Secondly, forcing employers to pay a minimum wage means that employers will be able to hire fewer workers or will be forced to fire some. Those who are not hired become “unseen victims.”

Thirdly, Secondly, low-skilled workers will not be able to learn basic job skills if they are not hired. This disproportionately harms the young and the uneducated and could very well trap them in poverty for their entire lives. The current minimum wage only affects about 5% of the population in the United States. Few of those at minimum wage remain there for long—“as they acquire skills, their productivity rises and they command higher wages.”

(For a much more detailed discussion of Bill O’Reilly’s dubious views of economic, political, and social issues, read my new book The Real Culture War: Individualism vs. Collectivism & How Bill O’Reilly Got It All Wrong. Available now on Amazon in both print and Kindle.)