Sunday, April 19, 2015

Minimum Logic, Maximum Straw

by Don Boudreaux April 18, 2015

Here’s a letter to Mother Jones:

Congratulations! You’ve well and truly slain a straw man by reporting that “[c]onservatives have long portrayed minimum-wage increases as harbingers of economic doom, but their fears simply haven’t played out” (“As Cities Raise Their Minimum Wage, Where’s the Economic Collapse the Right Predicted?” April 16).

No serious opponent of minimum wages has ever said that they are “harbingers of economic doom” and sparks of “economic collapse.” Not Milton Friedman. Not F.A. Hayek. Not Thomas Sowell. Not my colleague Walter Williams. No credible scholar or pundit has ever made such a prediction about minimum wages at the relatively low levels that these wages are set in the United States. The reason is that only a small percentage of the workforce earns wages at, or just above, the prevailing legislated minimum. Therefore, minimum-wage hikes of the sort that are typical in the U.S. cannot possibly propel the economy to the brink of “collapse” or unleash economic “doom.”

What minimum-wage hikes do unleash, however, is devastation upon a relatively small number of largely invisible workers – workers who are the least skilled and most disadvantaged. Raising the minimum wage destroys jobs for many of these poor workers while making the jobs of other such workers more onerous. But because these workers are so relatively few in number, their suffering, while very real, is easy to miss when looking at the aggregate data. This fact explains why some – by no means a majority – of minimum-wage studies (particularly those that examine only short spans of time) find no negative employment effects.

Serious opponents of minimum-wage legislation insist that it is unjust to overlook the suffering of people forcibly priced out of work or into jobs less preferable than the ones they would otherwise have – unjust even if the number of affected workers is so small as to be missed by weak empirical studies and too tiny to be classified as ”doom.”

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

(I thank Timothy Wise for the pointer to the Mother Jones report.)

 

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