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A Parade of Flawed Arguments for Minimum-Wage Legislation

Here’s a letter to the Wall Street Journal:

San Francisco City Supervisor Jane Kim swings and misses at Michael Saltsman’s argument against the minimum wage (Letters, Dec. 6).  First, she notes that San Francisco’s overall unemployment rate is lower than the national average.  Irrelevant.  The argument against the minimum wage is not that it destroys jobs generally but, instead, that it destroys jobs for workers with no or only limited skills.  Fortunately, such workers are a small portion of both the nation’s and of San Francisco’s workforce.  Yet this fact means that their joblessness often makes no discernible impact on the overall unemployment rate.  A much more relevant statistic – one that Ms. Kim does not mention – is the unemployment rate of teenagers and other low-skilled workers in San Francisco.

Next, Ms. Kim boasts that S.F.’s leisure and hospitality industry recently added nearly 17,000 jobs.  Also irrelevant.  The core argument against the minimum wage is not that it destroys jobs in particular sectors but, rather, that it destroys jobs for particular workers.  Increased consumer demand can cause an economic sector – even one that employs many low-skilled workers – to boom even as the minimum wage prevents that sector and others from employing all the low-skilled workers who would be employed without the minimum wage.

Ms. Kim then observes that “even at $15 an hour, many jobs go unfilled.”  Again irrelevant.  The minimum wage makes certain workers unemployable, not certain jobs unfillable.  Ms. Kim follows her observation by pivoting to describe Mr. Saltsman’s organization, the Employment Policies Institute, as “funded by conservative special interests and devoted to opposing the minimum wage.”  An ad hominem argument, such as this one, is a fallacious argument.

Finally, when Ms. Kim writes that “The minimum wage isn’t a pathway to the middle class; it is a safety net to prevent destitution,” she reveals that she doesn’t understand the key problem with the minimum wage – namely, that it causes some workers’ earnings to fall to $0.  However economically precarious one’s life might be when paid a positive market wage of less than $15 or less than $7.25 per hour, that life is far more precarious when paid $0 per hour.

Minimum-wage legislation isn’t a safety net; it’s a knife that shreds the safety net of employment opportunities in the market.

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