The Evil that is Minimum-Wage Legislation

by Don Boudreaux on October 20, 2013

in Reality Is Not Optional, Seen and Unseen, Work

Aaron the Aaron writes to me yesterday morning by e-mail, in a great huff:

You [Boudreaux] mis-represent the minimum wage.  Its not government telling workers to be unemployed if they’re not paid the minimum wage.  Its government ordering businesses to pay all workers [at least] what the minimum is.

Here’s a project for all unemployed young people – say, ages 18 through 21 – in America today.  Go to a nearby supermarket or restaurant or lawn-care company or pet store and ask for a job at the minimum wage.  If you are denied, offer to work for $4.00 per hour.  The owner or manager will almost surely decline, saying that it’s against the law.

“Would you like to hire me at $4.00?” you ask.

“Well yes I would” is the answer you’re likely to get in reply.

“So, hire me at that wage.  I’m an adult, I’m sober, and I have no mental issues.  I’m willing to work for $4.00 per hour.”

“You don’t get it, kid.  I can’t hire you at that wage.  I’ll get fined, or worse.  Go away.”

“Ok, I’ll leave.  But no one – including you – will hire me at $7.25 per hour.  What am I supposed to do?”

“Look kid.  That’s your problem.  I’m sorry.  I don’t make the laws, but I gotta follow them.  Go away now.”

I suspect that some such conversation as the above would be rather common.  And notice that it highlights the fact that Mr. the Aaron is factually mistaken to assert that the minimum wage is a policy by which “government order[s] businesses to pay all workers [at least] what the minimum is.”  The young man or woman in the above little fictional dialog is a worker – just one without work.  He or she is, as a consequence of the minimum wage, paid an hourly wage of $0.00.  The government does not, and practically cannot, order employers to pay unemployed workers the minimum wage.

A legislated minimum wage unambiguously orders that all workers who cannot produce for employers value-per-hour at least equal to the legislated minimum wage remain unemployed, without incomes and without the job experiences that would be gained from working at hourly wage rates below the stipulated minimum.  That is the explicit means chosen by its champions to further their stated goal of improving the welfare of low-skilled workers.

Minimum-wage legislation is for this reason, and for many others, a devil camouflaged as an angel.

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