… is from page 22 of the 2009 Revised Edition of Thomas Sowell’s Applied Economics: Thinking Beyond Stage One:
Most people in modern industrial societies are called workers or labor. However, people represent not only labor but also capital investments. Schooling, job experience, reading, experience gained tinkering with cars or computers, as well as by absorbing the knowledge and experience of parents and peers, all contribute to the development of the skills, insights, and capabilities on the job that economists call human capital.
And so, because minimum-wage statutes price some low-skilled workers out of jobs, minimum-wage statutes are a means by which governments obstruct the ability of low-skilled workers, in effect, to become capitalists. Minimum-wage legislation obstructs the ability of low-skilled workers to acquire the human capital that is gotten on the job.
How very ironic, then, is the large overlap between those who support minimum wages and those who complain about income and wealth inequality? The former is among the policies that artificially promote the latter outcome.
Few policies are as anti-poor and anti-minority as are minimum wages. This reality is unaltered by the fact that most people today who support minimum wages are unaware that such legislation results in outcomes quite the opposite of those that the supporters wish. Intentions – it cannot be said too often – are not results.
That many non-economists do not understand the real-world consequences of minimum wages is sad but understandable. But that a not-insignificant number of trained economists today support the minimum wage speaks either to how poorly these economists are trained, or to the power of motivated thinking to enable people to twist themselves into intellectual and ethical knots in order to ‘see’ reality as they wish it to be (or, perhaps, to both).
An economist whose support for minimum wages rests on the belief that such legislation leads to the worsening of employment prospects for no workers is as deficient at thinking as would be a physicist who denies that the law of gravity operates on the dark side of the moon.