Reason’s Jess Remington reports that the Washington Post‘s Fact Checker is – just like, for instance, Greg Mankiw and me – unimpressed with the accuracy of Pres. Obama’s assessment of the research on the employment consequences of minimum-wage legislation.
And Timothy Taylor calls out Pres. Obama for twisting and misrepresenting Adam Smith’s arguments in an attempt by Obama to make it appear that the Great Scot supported minimum-wage legislation. Being now in the middle of reading, cover to cover, The Wealth of Nations carefully for the third time, I can assure you that Smith would have been an outspoken opponent of minimum-wage legislation – or, as Taylor concludes:
But frankly, it is ridiculous to cite Adam Smith in support of minimum wage legislation. A more plausible argument, although still running a real risk of anachronism, would be that Adam Smith believed that rapid economic growth and a tight labor market–say, the situation of the U.S. economy in the mid to late 1990s–was the way to benefit ordinary workers.
People don’t go into business to create jobs; they go into business to make money. Labor is a cost. The more expensive labor is, the more attractive nonhuman replacements for labor become. The minimum wage makes labor more expensive. Obama knows this, which is why he so often demonizes ATM machines as job-killers.