Some Policy Questions Only SEEM To Be Easily Answerable By Examining ‘The Data’

by Don Boudreaux on October 2, 2015

in Seen and Unseen, Work

Here’s an open letter to Cafe Hayek commenter Thomas Hutcheson:

Dear Mr. Hutcheson:

Commenting on a post of mine at Cafe Hayek, you say that those of us who argue that the minimum wage destroys some jobs miss the point.  The real point, you insist, is “the amount of harm to low income workers compared to the benefits going to other low-income workers.”

You do raise an issue separate from the one that I normally discuss, but the one that I normally discuss remains hotly disputed.  Support for the minimum wage would likely decline significantly if the public understood that raising the minimum wage prices some of the poorest workers out of the labor market.  (How many pro-minimum-wage politicians today have you heard admit the likelihood, or even the possibility, that raising the minimum wage will destroy some jobs?  They never do.  They either do not mention the issue or they stoutly deny that any such job destruction occurs.)  It’s true that one can still support the minimum wage even if one understands that it destroys jobs.  But one must understand this downside in order to weigh properly the merits of any potential upsides.  Yet the fact remains that most politicians and pundits, and even many professional economists, still contend that there are no downsides of the minimum wage for workers.

Now to your point.  Suppose that Donald Trump were to propose legislation outlawing the employment of any and all Hispanics.  Do you think that, before we are justified in opposing such legislation, we must first gather data to see what its result would be on the distribution of income among minority workers?  If econometric studies find evidence that such legislation would raise the aggregate income of blacks by more than the resulting fall in the aggregate income of Hispanics, would this legislation pass a proper cost-benefit test and, hence, be legislation that ‘the facts’ show to be justified?

I trust that you’d oppose such legislation regardless of the resulting amount of measured harm to some minority workers compared to the measured benefits going to other minority workers.  For the very same reason, I oppose minimum-wage legislation regardless of its measured effects on the distribution of income among workers.  I oppose it because it is unethical (and, for reasons apart from income distribution, also economically harmful to society) for government to strip some people of economic opportunity in order to artificially enhance the opportunities available to other people.

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

In short, the most relevant, and least subjective, empirical fact (as I see it) – which also has ethical content – is that minimum-wage legislation almost certainly inflicts harm on some individuals.  (And contrary to some suppositions, no conceivable empirical data can alone determine whether this harm is objectively outweighed or not by some corresponding benefits.  Ethical judgments are simply unavoidable.)


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