Blogging at DivisionofLabour, Ed Lopez of San Jose State says the following about the current debate over the minimum wage:
I find it beneficial to sort through all the arguments again every time Congress considers increasing the minimum wage. Personally I think the debate has shifted away from whether MW helps/hurts the poor. If it hurts (which it almost certainly does on net), the magnitude is fairly small and there are lots of compensating factors/opportunities in this dynamic economy. Rather, the debate is now whether economic theory still has bite for policy analysis. If interventionists can chip away at the law of demand on this point, that opens up a lot of doors (e.g., progressive taxation, safety regulation, you name it). Personally I oppose MW more on natural rights and slippery slope arguments than on harm to unskilled labor. But it’s like my dissertation advisor used to say with a grin. “Ed, if we don’t defend homo economicus, who will?”
Great point about “chipping away at the law of demand.”
Like Ed, I oppose raising (or even having) the minimum wage mainly on non-economic grounds. (That’s not to say that the economic arguments against it aren’t convincing.) I think that the best argument of all against it is that it’s aggression on the part of government enforcers to tell an employer, “You haven’t been paying this worker as much as politicians say you should, so now you must be penalized.” People should no more be subject to legal action for engaging in a perfectly voluntary employment contract than they should be for (to cite a few other things that politicians over time have decided were bad) drinking a beer, gambling, or not accepting the official religion.
I regard aggression against peaceful individuals as wrong, and that’s why the minimum wage law should be repealed.
