Quotation of the Day…

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… is from page 25 of the Second Edition (2025) of GMU Econ alum Benjamin Powell’s excellent book Out of Poverty: Sweatshops in the Global Economy:

Passing a law that mandates higher pay does nothing to make workers more productive, nor does it create new alternatives to bid workers away from their current jobs. Legal minimum wages simply outlaw potential gains from trade between employers and workers. Paraphrasing liberal Nobel laureate Paul Samuelson, it does a potential sweatshop worker, who can create $2 per hour of value, no good to know that by law he must be paid $3 per hour if that very law keeps him from getting a job.

DBx: Yep. And of course, the same holds true for low-skilled workers in rich countries such as the U.S. Minimum-wage legislation effectively makes it illegal for workers whose productivity is below the minimum to be employed.