“Here, Bear this Extra Burden, You Low-Skilled Worker. It Will Help You!”

by Don Boudreaux on July 26, 2009

in Myths and Fallacies, Reality Is Not Optional, Regulation, Seen and Unseen, Work

Plenty of politicians, pundits, and preachers are applauding today's hike in the national minimum-wage from $6.55 per hour to $7.25 per hour.  Too few pause to ponder the fact that this hike means that Uncle Sam has arbitrarily raised the hourly cost of employing low-skilled workers by 10.7 percent — a policy move always unwise, but especially regrettable when unemployment is rising.

Each semester I ask my
principles-of-economics students if they think that I would rejoice if
Uncle Sam passed a minimum-salary statute for economists, mandating
that every economist employed be paid at least $300,000 annually.  (I would, of course, very much love to earn this much money annually by teaching economics.)  I then
explain that my more talented and accomplished colleagues, such as
Tyler Cowen and Walter Williams, would surely
benefit from such a mandate.  I, in contrast, would lose my job.

……

For those of you who will accuse me of being a benighted ideologue on this topic, I refer you to this post from June 2006.

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