by George Leef
Today’s Wall Street Journal has a good piece by two young economists that attacks the flawed research purporting to show that raising the minimum wage does only good things. In the letter below, Professor Don Boudreaux comments further.
But before getting to Don’s letter, I’d like to say that the best argument against the minimum wage is not that it has harmful economic consequences, but that it is simply wrong for the state to punish anyone for entering into a peaceful labor contract. Doing so is no better than punishing someone for purchasing a book that the politicians don’t want anyone to read.
Here’s the letter:
Editor, Wall Street Journal
1211 6th Ave.
New York, NY 10036
Kudos to George Mason University economics PhD student Liya Palagashvili and to her GMU econ undergraduate student Rachel Mace for exposing the flawed analyses of those who contend that recent hikes in some states’ minimum wages resulted in especially strong job growth in those states (“Do Higher Minimum Wages Create More Jobs?” August 21).
Yet another point deserves mention, one that I’m sure Liya and Rachel would have addressed had space allowed. Even if (contrary to Liya’s and Rachel’s finding) states that raised their minimum wages did indeed enjoy higher employment growth than did states that did not raise theirs, the foundational economic argument against the minimum still stands. That argument is that the minimum wage reduces the employment prospects of the lowest-skilled of low-skilled workers. It’s possible that raising the minimum wage attracts into the labor market so many employable higher-skilled workers, such as recent retirees, that the effect on overall employment is positive (or not negative) even though – as economics warns – many low-skilled workers are nevertheless pushed into the ranks of the long-term unemployed.
In short, the central economic argument against the minimum wage is not that it reduces overall employment (even though it likely does); rather, it’s that the minimum wage reduces the employment prospects of the people most desperately in need of jobs: workers with the fewest job skills.
Donald J. Boudreaux
Professor of Economics