… is from page 115 of the 2019 Mercatus Center edition of my GMU Econ colleague Richard Wagner’s excellent 1989 book, To Promote the General Welfare:
Most low-wage jobs are initial and not terminal employments. And there would be many more such jobs if they were not prevented by minimum wage legislation. Such jobs are often entry points into the world of work. As people accumulate the skills and traits that are required for successful employment, they typically move on to higher paying jobs. Being an usher in a theater before that type of work was largely precluded by minimum wage legislation may have been the first step into the world of work.
If entry-level jobs are foreclosed, however, an opportunity for the creation of skills and traits is also foreclosed. Without the opportunities for personal development that are provided by such entry-level jobs as ushering in theaters, the chance or the opportunity to move into higher paying jobs is diminished. Work experiences contribute to a person’s human capital and thereby increase earnings. In the absence of the experience afforded by entry-level employment that might pay less than the minimum wage, less human capital will be accumulated, which in turn will lead to lower lifetime earnings.
DBx: Advocates of minimum wages – in addition to stubbornly refusing to recognize that raising employers’ costs of using the input called “low-skilled labor” incites employers to use less of this particular input – ignore the damage that this restrictionist policy has on the human capital and lifetime earnings of workers whose entry into the labor force is either delay or altogether blocked.
Far from helping to reduce poverty and income inequality, minimum-wage legislation perpetuate poverty and inequality.