Mark Perry expands on the observation that employers of low-skilled workers adjust to minimum-wage hikes along a host of different margins, nearly all of which adjustments make many low-skilled workers worse off as a result of minimum-wage hikes. A slice:
That is, to the extent that minimum wage increases are completely offset by employers naturally reducing the non-wage attributes offered to their employees to remain profitable, even unskilled workers who remain employed will not necessarily be better off from a minimum wage hike. Their total compensation could stay the same, or maybe even be reduced if the reductions in non-wage attributes more than offset the artificial increase in monetary wages. In the same way that a tenant who is able to find a rent-controlled apartment in Manhattan will pay a below-market rent, but will also have to live in a necessarily reduced-quality housing unit, the unskilled worker who manages to keep or find a job following an above-market minimum wage hike will likely work in a reduced-quality work environment with significantly reduced non-wage attributes.
Steve Horwitz productively expounds upon a point that was a favorite of the late Armen Alchain – namely, in Steve’s words, “Competition is not a product of living in a capitalist society — it’s a product of not living in heaven.“