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Reality Remains Mandatory

Here’s a letter to the Palm Beach Post:


For the sake of all low-skilled Floridians, let’s hope that the attempt to raise Florida’s minimum wage fails (“Florida $15 minimum wage drive gains enough signatures,” October 30). If this attempt succeeds, many of Florida’s poorest workers will be cast into the ranks of the unemployed.

The case, theoretical and empirical, against minimum wages is solid. It’s simply untrue that minimum wages help all low-skilled workers without harming any of them. But reviewing this case can be tedious. So here’s how I now summarize it to my students:

Suppose government were to mandate that everyone who gives money to buskers and other street entertainers may deposit into the entertainers’ open guitar cases or hats no sum less than $15. That is, while no one is obliged to give anything at all to these entertainers, each person who does give is legally obliged to ensure that each contribution is no less than the minimum required $15.

What will happen to the amount of income earned by buskers and other street entertainers? While it’s easy to fantasize that this income will rise – this intellectual feat can be performed by preschoolers – the answer obvious to adults is that this income will fall. Nearly everyone who finds it worthwhile to contribute on each occasion $1 or $5 will, with the minimum-contribution requirement in place, contribute nothing. They will not contribute the minimum mandated $15.

Although differences do separate employees from street entertainers, in this way they are identical to each other: government diktats can no more determine the total amounts that employers pay to workers than such diktats can determine the total amounts that pedestrians contribute to street entertainers. And just as attempts to compel pedestrians who contribute to contribute minimum amounts would backfire and harm the people meant to be helped, so too do attempts to compel employers to pay minimum wages backfire and harm the people meant to be helped.

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


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