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Henderson on the Minimum Wage

Posted By Don Boudreaux On August 1, 2006 @ 9:04 am In Myths and Fallacies,Prices,Regulation,Work | Comments Disabled

Economist David Henderson [1] packs a lot of argument and evidence into this essay [2] that appears in today’s Wall Street Journal.  David reviews the powerful reasons why legislating a "minimum wage" is unsound public policy masquerading as compassion.

I especially like David’s summary of one of the (many) criticisms of the (in)famous 1994 study by David Card and Alan Krueger — a study purportedly finding that raising the minimum wage might actually increase employment of low-skilled workers:

As Donald Deere and Finis Welch of Texas A&M University, and Kevin
M. Murphy of the University of Chicago, pointed out, an increased
minimum wage help expand jobs at franchised fast-food outlets by
hobbling competition from local pizza places and sandwich shops. This
could explain, in fact, why Messrs. Card and Krueger found fast food
prices rising more quickly in New Jersey than in Pennsylvania, a fact
that they were unable to explain.

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[1] David Henderson: http://www.davidrhenderson.com/

[2] this essay: http://online.wsj.com/article/SB115439870173323067.html?mod=opinion_main_commentaries

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