Here’s a letter to a new correspondent from my hometown of New Orleans:
Mr. Marion Ellis
Dear Mr. Ellis:
You say that your “instincts” tell you that “minimum wage increases don’t kill jobs for poor workers.” And you are “staggered” that my “instincts” tell me differently. You “simply can’t imagine” that raising the minimum hourly wage by $2.85 (from $7.25 to $10.10) “will trigger businesses to hire less workers.” You say that you also are “convinced” by the “abundant research” that “finds the minimum wage causes no loss of jobs.”
My “instincts” (as you call them) are largely the product of my training in economics. So it’s really my understanding of economics that tells me that minimum-wage legislation harms the very workers that it is ostensibly supposed to help.
But let me test your instincts with a question posed by the economist Mark Perry:* Do you believe that imposing a tax on employers for every low-skilled worker that they hire would not reduce the number of low-skilled workers hired? Do you believe that requiring employers to pay a tax of $2.85 per hour for every low-skilled worker on their payrolls would not prompt employers over time to employ fewer such workers? Do you suppose that firms are so inattentive to their bottom lines or so unable to figure out how to operate profitably with fewer worker that such a tax – which would be about $5,700 annually for each and every low-skilled worker employed full-time – would not reduce low-skilled workers’ employment options?
If you answer “yes” to these questions, then your instincts do indeed differ greatly and irreconcilably from my own.
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
P.S. And no: no one pays me to express my opposition to minimum-wage legislation. I don’t suspect for a moment that someone is paying you to express to me your support for such legislation, so why would you suspect that someone is paying me to express my opposition to the same?