Wednesday, November 18, 2015

Don Boudreaux - Why he opposes a minimum wage

Here is a link to a well written explanation by Don Boudreaux about why he opposes the minimum wage.  Don is on target.

A snippet:

First, I trust that everyone here shares the goal of having low-skilled workers paid incomes as high as possible with no one forced into the ranks of the unemployed or obliged to suffer other negative consequences. That is the value judgment that I carry with me throughout tonight’s discussion and in every discussion that I have about the minimum wage.

Second, my concern is exclusively for the well-being of low-skilled workers. My assessment of the minimum wage turns only on how well or how poorly it is likely to benefit such workers. I don’t care about the effects of the minimum wage on the welfare of employers, business owners, or investors.

You might disagree with my conclusions, but that disagreement will be over the predicted consequences of the minimum wage and not over values or goals.

I oppose the minimum wage. I oppose it in part because my economic reasoning makes me worry about its consequences for low-skilled workers.

I worry that, by raising employers’ costs of employing low-skilled workers, it makes the employment of such workers less attractive and, thus, reduces and worsens their employment options. The result is unintended harm to at least some – and perhaps many – low-skilled workers.

I worry, further, that the effects of the minimum wage – both positive and negative – are not distributed randomly. By reducing the number of jobs for low-skilled workers while simultaneously drawing more workers into the pool of those who compete for minimum-wage jobs, the risk is real that those who get and keep jobs at the higher minimum wage are workers who need higher incomes the least, and the workers who are denied jobs are those who need any incomes the most.

Choosing from a larger pool of applicants for a smaller number of jobs – a pool of applicants that includes college students and retirees drawn into the workforce by the higher minimum wage – employers are too likely, too often, to choose the ‘safe’ applicant over the recent immigrant, the single mom, or the inner-city minority teen.

Finally, I worry that this ignorance of the possibility that minimum wages actuallyharm some low-skilled workers – and harms those who can least afford to be harmed – causes voters and government officials to assess minimum-wage legislation more favorably than they would assess it were the possibility of such harm more widely recognized.

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