≡ Menu

Again, Put Your Money Where Your Mouth Is or Shut Your Mouth Up

This young economics major is confident that the case against raising the minimum wage is (his words) “elitist apologetics”:

Mr. A___:

Continuing to make the case for raising the national hourly minimum wage to $15, you assert – in response to my last letter – that “there is zero evidence that most of these [low-paid] workers are paid anywhere close to the value of their contributions to their employers bottom lines.”

Your assertion is mistaken. In my letter to you yesterday I linked to my and Liya Palagashvili’s March 7th, 2014, Wall Street Journal op-ed in which we presented such evidence. You’re free, of course, to question the soundness of this evidence, but the evidence itself exists.

You and I could duel with data all day long. You send me a study; I send you a study; you send me another study – it will never end and no mind will be swayed.

So let me support my claim by pointing to evidence that doesn’t appear in a study but that is as conclusive as evidence on such matters gets. The evidence is your own behavior – specifically, your failure to start a business that employs at least some among these legions of workers who you insist are today underpaid.

If you really believe that America is filled with legions of underpaid workers, you can make a sure fortune by taking a year or two away from school and starting, say, a chain of restaurants or lawn-care companies. Entry into these industries is easy. And with a large pool of underpaid workers currently toiling away at the likes of McDonald’s, Home Depot, and Aunt Myrtle’s Country Kitchen, you’ll easily be able to hire away these workers at wages above the exploitation wages they now earn yet still at levels that enable you to reap a handsome profit by employing each one.

You’ll grow rich as you raise the pay of the workers about whom you care so deeply. It’ll be a win-win.

But if you do not put your time, effort, and money where your mouth is, then I’m left with one of two conclusions. Either you don’t really believe what you assert to be true, or – more likely – you haven’t thought with sufficient seriousness about the meaning and implications of your assertion. No third conclusion is plausible. (Note: The fact that your assertion is made also by some PhD-sporting economists doesn’t save you from my criticism here. Those economists’ failure to start firms that employ these allegedly underpaid workers means only that they, too, either don’t believe their assertions or that they haven’t thought seriously enough about what those assertions imply.)

People aren’t lab rats for coercive social experiments. Yet you wish to conduct such an experiment by coercively preventing low-skilled workers from bargaining for employment by offering to work at wages less than $15 per hour. And to justify your wish, you assert – without, apparently, thinking seriously through the matter – that large numbers of workers who are now paid less than $15 are grossly underpaid.

The world, Mr. A___, has a superabundance of good intentions exercised on the cheap. It doesn’t need yours. What it does need, and what I hope it will eventually get from you, is serious, sound analyses of likely consequences. And so I urge you to pay less attention to whatever economics books you’re now reading and to instead study carefully better ones. Start, for example, with Armen Alchian’s and William Allen’s Universal Economics. If you promise to read this book from cover to cover, I’ll buy a copy for you. Seriously.

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