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How About Minimum-Handout Legislation?

Here’s a response to someone who is unhappy with my letter in yesterday’s Wall Street Journal:

Mr. Gene Randazzo

Dear Mr. Randazzo:

I’m sorry that you’re upset by my letter, in yesterday’s Wall Street Journal, opposing minimum wages.  But you miss the point when you ask me rhetorically how I “would like to live on just $7.25 an hour.”

Of course I wouldn’t like to live on just $7.25 per hour.  Yet even less would I like to live on $0.00 per hour, which is the hourly income of people rendered unemployable by the minimum wage.

To test the logic of your premise that a government dictation of a higher minimum wage causes all workers to be paid at least that wage, with none of them losing jobs, let me ask you if you’d like to live on the hourly pay of a street beggar who currently earns from his panhandling about $3 per hour.  Assuming that you’d not like to live on such paltry pay, would you support minimum-handout legislation – legislation that prohibits people who give to beggars from giving to any beggar any amount less than, say, $10.10 each hour?  Under such legislation, a person can give a beggar nothing, but everyone who chooses to give more than $0 to a beggar must give that beggar a minimum of $10.10 or risk being fined or caged by government.

If you were a beggar, would you support such legislation?  Were such legislation to be enacted, do you think that everyone who currently gives to beggars would increase their giving to $10.10 per hour with none of them simply ceasing to give altogether?  Do you believe that such legislation would enrich beggars?

Do not mistake me as here equating low-skilled workers with beggars; they are not remotely alike.  But what does hold true across all facets of human behavior is the reality that as the cost to a person – any person – of engaging in some activity rises without a corresponding increase in the benefit to that person of engaging in that activity, that person will engage in less of that activity.  This truth holds for employing workers no less than for giving to beggars.  And that you or I or Pres. Obama might “like” economic reality to be different is utterly inconsequential.

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

People who believe that the wages of all low-skilled workers will be raised to at least $X per hour if government declares that employers must pay all of their workers at least $X per hour should – were they consistent in their understanding of reality – also believe that the life-expectancies of all cancer patients will be raised by Y number of years if government declares that all physicians must keep their patients alive for at least an additional Y number of years.  I see no obvious reason why someone who believes that government possesses the power to miraculously alter economic reality does not believe that government possesses the power to miraculously alter any and all other aspects of reality.