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Maximally Mysterious

Here’s a letter to the Florida Times-Union:

Supporters of the minimum wage assume that the only response people have to higher costs imposed by government is to pay those higher costs (“Readers debate the merits of the minimum wage,” May 4).

Let’s test this assumption’s robustness.  Suppose that instead of legislating a minimum wage, government legislates a “minimum customer contribution.”  Each consumer would be forced to deposit $2.50 into a bin every time he or she walks into a Wal-Mart, Safeway, McDonald’s or other retail store.  At the end of the day the bins would be emptied and their contents distributed in equal shares to each retailer’s non-managerial employees.  Customers using drive-up windows and on-line retailing sites would be exempt from this mandate.

Does anyone suppose that such a mandate would not prompt consumers (even many with high disposable incomes) to reduce their frequency of entering retail stores?  Would anyone fantasize that the good intentions of the supporters of this minimum-customer-contribution legislation – or the asserted “need” of every worker to earn a “living wage” – are sufficient to prevent consumers from shifting their activities away from shopping in brick-and-mortar stores and toward greater use of drive-up windows and on-line retailing?

I’m guessing not.  So why do so few people see that minimum-wage legislation prompts employers to use fewer low-skilled workers?  Why do minimum-wage proponents overlook (among other facts) the artificially increased incentives that such legislation gives to employers to replace many low-skilled workers with machines – such as self-checkout lanes, and robotic floor cleaners – whose employment is exempt from minimum-wage legislation?

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