California’s recent hike in the minimum wage

A letter from Don Boudreaux to the Wall Street Journal.

DB is on target. It's marginal revenue vs marginal cost, folks.

---------------------------------

Editor:

Reporting on California’s recent hike in the minimum wage for workers at fast-food restaurants, you note that “a spokesman for the governor said fast-food companies can afford to give their workers a deserved bump in pay” (“California Fast-Food Chains Are Now Serving Sticker Shock,” April 27).

Bad arguments for minimum wages abound, but this one is among the silliest. Elon Musk can “afford” to pay $100 million annually to his dog groomer, but this fact doesn’t mean that he’ll do so simply because the government decrees that the minimum annual salary for dog groomers is $100 million. A business employs only those workers who make positive contributions to its bottom line. Workers who must be paid more than they contribute will find themselves unemployed regardless of the business’s net worth.

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