Minimum-Wage Laws: Economic and Political Effects

    Predictably, the Democrats in D.C. are all in favor of a huge increase in the federal minimum wage. They declare that this move will help to lift lots of workers above the poverty line, and, pointing to some dodgy studies, insist that few if any people will be thrown out of work.

    In this Reason article, Veronique de Rugy disagrees, arguing that it will be very harmful to the poorest and least skilled of workers. Many will lose their jobs, and many more won’t ever find a first job.

    My only complaint is that she calls the minimum wage “well intentioned.” I don’t think so.

    Most politicians know perfectly well that some workers will be hurt, but to them (the politicians), that doesn’t much matter. Very few of those hapless workers will pin the blame on them for the loss of jobs and besides, the unemployed are the natural constituency for Democratic rhetoric about the need to “build an economy that works for everyone.” Therefore, there is little if any political downside.

    But there is plenty of upside. The politicians get to strut around as saviors of the poor and claim credit for the higher incomes of those who kept their jobs, even though most of them would have naturally earned raises anyway. Moreover, the whole business of dictating higher wages reinforces the ruinous idea that the way to get ahead in America is to demand political action rather than to improve yourself.

    Minimum-wage opponents have been showing the damage that the law does to individual workers and business owners for a long time, and yet I have never heard of any politician changing from proponent to opponent on the basis of such evidence.

    So, I don’t think minimum-wage laws are well intentioned. I think they are a case of callously sacrificing the welfare of some people for expected political benefits — cracking some poor eggs for a tasty political omelet.

    George Leef is the the director of editorial content at the James G. Martin Center for Academic Renewal.

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