- Cafe Hayek - https://cafehayek.com -

Some Additional Questions for Supporters (Especially Among Economists) of the Minimum Wage

Tweet [1]

1. Suppose that all low-skilled workers telecommute to their jobs in the U.S. from foreign countries, and that Congress imposes a tariff on the importation of such services.  Do you predict that employers of these workers will continue to hire the same hours of labor from such workers – under the exact same terms of employment – as these employers hire without the tariff?  If not, why do you believe that obliging employers to pay to low-skilled workers a per-hour tax called “minimum wage” will not reduce the number of hours that employers hire of such labor?

2. Suppose the government, expressing pity for producers of low-priced metals, passes and enforces a minimum-price-of-metal statute that prevents metals from selling at prices as low as some metals have been selling for recently.  Suppose also that researchers from Ivy League schools report, from their empirical investigations, that this government action results in no empirically detectable reduction in the amounts of metal used in the construction of skyscrapers, automobiles, lawn mowers, snowblowers, outdoor grills, and other products made with lots of metal.  Would you conclude that government can raise the incomes of all metal producers simply by passing such legislation?  Would you wonder why metal is apparently an exception to the foundational law of demand?  How many such studies would be required before you conclude that, yes indeed, the market for metal (especially low-quality metal) is so different from that of other goods and services that the law of demand is inoperative in that market (at least for relatively modest, government-imposed hikes in the price of metal)?

And even if you become convinced that these empirical studies are flawless and that their findings are indisputable, would you worry that the minimum-price-of-metal legislation causes a substitution away from the use of lower-quality metals in production toward the use of more higher-quality metals?  (That is, would you worry, even if the absolute amount of metal used in production is unchanged by the minimum-price-of-metal legislation, that lower-quality metals – the ones whose makers the government meant to help – are being used less while higher-quality metal are now being used more?)

Just asking.