The Minimum Wage Straw Man

Warren Meyers and Forbes provide the straw man machete:

The defense of the minimum wage can, on its face, appear compelling, even emotionally urgent:  Everyone deserves a wage they can live on, and that without the backing of the US government, the poor will be powerless to turn down what are effectively slave wages.  After all, who wants to live and support a family on $7.25 an hour?  or less? I certainly don’t.  But, in fact, most minimum wage earners are not actually trying to support a family on a single minimum wage income, or at least they don’t have to do so for long.  Under 5% of the US wage earners make the minimum wage or less, which means that since wage earners only represent a bit over half the total work force (the rest are paid a fixed salary), those who earn the minimum wage make up less than 3% of the total work force.   Of these, more than half are under 25 or over 70, and many who earn a minimum wage have other jobs or other family members who works.

As a result, there are 4-5 times more people currently unemployed or who have given up looking for a job than earn the minimum wage.  That might give us a hint, from a policy standpoint, that if we are worried about the poor we should be spending more time worried about how many people make a wage at all than how small or big that wage might be.  In fact, the real problem with a minimum wage is that it actually exacerbates unemployment, making it harder for low-skilled people to find work.


I sat right next to a progressive on the John Stossel show the other day who argued that, in effect, the demand curve for labor is at best flat, and perhaps upward sloping.  Seriously.  This is one topic where I greatly encourage you not to get sucked into the dueling economic study wars.  Just ask yourself, if the guy who does your lawn, or cleans your house, or washes your car, or provides nearly any other service you might use, were to tell you his hourly rates were going up, would your first reaction be to ask him to work more hours? Markets set wages, and for 97%+ of Americans, the market wage rate is above the minimum. Left unexplained by progressives, of course, is if the government is needed to set a wage floor because greedy companies will only pay the minimum, why do the other 97% pay more than the minimum?

Perzactly.  If they want to use economics, ask them why economics don’t apply to labor demand.  H/T: Tigerhawk

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