≡ Menu

The Illogic of the Case for the Minimum Wage

After reading this Cafe Hayek post on an example of the illogic that runs throughout Douglas Rushkoff’s latest book, Art Carden e-mailed me to share a brilliant example of a similar piece of illogic that is commonplace in arguments for the minimum wage.  The indented quotation below is Art.  (“A” and “B” are each an argument frequently offered by proponents of the minimum wage.)

A: minimum wages will have positive effects because they will mitigate the effects of employer monopsony.

B: minimum wages will raise firm productivity and profitability by reducing employee turnover.

The argument: we will prevent firms from exploiting workers over whom they have market power and raise those firms’ profits by helping them retain workers who would otherwise move from job to job.

Neither A nor B plausibly describes reality.  But even if one or the other of these claims did describe reality accurately, it’s impossible for both to be empirically descriptive of reality.

The fact that the overall case for minimum wages features both such claims testifies to the chronic weakness of the case for minimum wages.


Next post:

Previous post: