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Here’s a letter to the editor of Compact:
Editor:
Michael Lind’s argument against critics of minimum wages is woefully uninformed (“Libertarians’ Big Lie on Wages [2],” May 9th) – for at least four reasons.
First, despite Lind’s insinuation, opposition to the minimum wage isn’t exclusively libertarian; it’s economic [3]. A majority of economic studies [4] continue to find [5] that minimum wages harm [6] many of the low-skilled workers [7] who are ostensibly meant to be helped.
Second, the lone example offered by Lind of an allegedly fallacious argument comes in a Forbes column by Tim Worstall from 2014 [8]. In the never-ending debate over minimum wages, is there really nothing more recent that’s worthy of the intellectual firepower of a pundit as penetrating as Mr. Lind?
Third, although this fact isn’t revealed in Lind’s screed, Worstall’s column is devoted to reporting the empirical results of a study [9] that finds that minimum-wage hikes result mostly in higher prices of outputs produced by low-wage workers. Nevertheless, Lind does accuse Worstall of committing an error so egregious that it allegedly discredits all arguments against minimum wages.
What is this weighty error? On Lind’s telling, it’s Worstall’s out-of-touch belief that nearly all buyers of goods and services whose prices are pushed upward by minimum wages are minimum-wage workers themselves. But a fair reading of Worstall reveals that he, Worstall, is guilty only of poor wording. Here’s the paragraph of Worstall’s column quoted by Lind as a “gotcha!”:
And I would actually go further. It’s the low paid themselves, those on or near the minimum wage, who are generally the consumers of things made by other low paid, minimum wage, workers. So it’s not entirely obvious that they were all made better off after all. For while they might have higher wages, those low-paid workers are also those bearing the brunt of the newly higher prices.
Yet in the paragraph immediately prior to this one, Worstall writes this about the research finding: “Or you could look at it as I do and point out that everyone in the country has just been made worse off by those higher prices.”
Worstall explicitly says that the higher prices are paid by everyone.
Still, Worstall’s wording in the paragraph quoted by Lind is indeed careless. I happen to know Tim Worstall, and I’m confident that he meant to say that because minimum-wage workers purchase many of the goods and services the prices of which are raised by minimum wages – and because these workers’ incomes are well below average – these workers suffer from these price hikes burdens heavier than are the burdens suffered by higher-income workers.
Fourth and most fundamentally, even if Worstall is guilty as Lind charges, Lind is simply mistaken to assert that
[o]ne of the most common arguments against higher wages and benefits for low-income workers is the assertion that, while higher wages might make some workers better off, by making the goods and services that those workers provide more expensive, those higher wages will make other low-wage workers worse off as consumers.
In reality, the argument described here by Lind, far from being “one of the most common,” is an argument that almost never appears in the case made by economists – or by libertarians – against minimum wages. By far, the main and most common economic (and libertarian) argument against minimum wages is that these wages, by artificially raising the cost of employing low-skilled labor, price many low-skilled workers out of jobs. These workers are thus denied not only current incomes, but also – and typically more importantly – the job experience that would be the ticket for many of these workers to higher-paying jobs in the future.
Lind, in short, ignores the main argument against minimum-wage legislation.
Lind obviously enjoys fulminating against libertarians for opposing minimum wages. But if he wants his harangues to be taken seriously, he should at the very least get straight the essence of what he dismissively labels as the libertarian argument. Until he does so, he and his readers will thrill only to his slaying of a man made only of the most brittle of straw.
Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030