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Economic Reality Suspended in Ideologically Convenient Places

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Here’s another letter to my high-school-teacher correspondent Mike Sweeney:

Dear Mr. Sweeney:

Thanks for your follow-up e-mail.

You argue that because some economists conclude, contrary to other economists, that a higher minimum wage will not reduce low-skilled workers’ employment prospects that I tell “a biased story.”  Given the “ambiguity” of economists’ conclusions regarding the minimum wage, I do an “injustice” by writing “as if the minimum wage plainly hurts underpaid employees.”

You’re correct that some economists conclude that the minimum wage generates net benefits for low-skilled workers.  But as I [2] (and others) have written elsewhere, that conclusion is so deeply at odds with so many premises and other conclusions that are widely accepted by economists that the burden of persuasion on those who support the minimum wage is far heavier than they have yet shouldered.

To see why, let me pose some questions to you and to anyone else who doubts that raising the cost of employing low-skilled workers will reduce those workers’ employment prospects.  Do you doubt also that:

– raising taxes on cigarettes will reduce cigarette purchases?
– tighter restrictions on gun purchases will result in fewer people purchasing guns legally?
– higher tariffs on imports will reduce the volume of imports?
– harsher penalties for employment discrimination will reduce the frequency of such discrimination?
– taxing carbon emissions will reduce such emissions?
– subsidies to green-energy companies will encourage more firms to operate in ways that make them eligible to receive such subsidies?

If you answered ‘no’ to the above questions, then why do you doubt that raising employers’ costs of employing low-skilled workers will diminish those workers’ employment prospects?  In each of the above hypotheticals, people are discouraged from doing some activity if their cost of doing that activity rises, and encouraged to do that activity if their cost of doing so falls.  Can you give me one plausible reason why firms’ employment decisions are somehow exempt from this otherwise-universal reality?

Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030