The legally mandated minimum wage is an economic issue, of course; but it is more fundamentally a moral issue. Unfortunately, usually only the left, with its claims about the alleged fairness of higher minimum wages, talks about the moral dimensions of the policy. That needs to change. Continue reading “The Moral Case Against Minimum Wage Laws”
Bernie Sanders, along with everyone who advocates minimum wage laws, at least implicitly recognizes that those laws can throw some people out of work.
Bernie Sanders, along with everyone else who advocates minimum wage laws, at least implicitly recognizes that those laws can throw some people out of work. Otherwise, Sanders and his allies would insist on a much higher minimum wage, say $100 per hour.
An exchange during the November 14 Democratic debate is instructive. Sanders clashed with Hillary Clinton over whether to raise the national minimum wage to $15 or $12 per hour. But why did the “democratic socialist” Sanders not ask for even more? Does he seriously think a working head of a family can prosper financially on a paltry $15 per hour? Why not $20? Why not $50? The answer is obvious: A higher minimum wage would throw even more people out of work.
Of course, the assumption that people earning a minimum wage support a family solely on that wage is usually false—usually those people are teens or young adults, often getting free rent and other perks at their parents’ house. But, for obvious reasons, advocates of minimum wage laws usually pretend that the norm is for someone earning a minimum wage to support an entire family on it.
During the debate, Sanders even admitted that minimum wage laws can throw people out of work. Moderator Kathie Obradovich asked:
You’ve talked about raising to $15.00 an hour everywhere in the country. But the President’s former chair of the Council of Economic Advisors, Alan Krueger has said the national increase of $15.00 could lead to undesirable and unintended consequences like job loss. What level of job loss would you consider unacceptable?
Sanders began his reply, “Let me say this—you know, no public policy doesn’t have in some cases negative consequences.” He made this concession because only an idiot would claim that a minimum wage set above a certain floor wouldn’t throw some people out of work.
True, Sanders later spouted nonsense about how a minimum wage would increase (some) people’s disposable income and “create jobs”—ignoring the fact that those people thrown out of work have no disposable income. Sanders also ignored a number of other facts, such that wealthier people also spend money on goods and services and that money taken out of investment hampers business development and slows economic growth. But, for one shining moment, Sanders let slip the obvious if uncomfortable truth about minimum wage laws.
Incidentally, Krueger—the economist cited by Obradovich—has an October 9 op-ed in the New York Times explaining his view that a $12 national minimum wage would be a good idea but that a $15 minimum would be too high. I think Krueger is basically on the wrong track for a variety of reasons; as examples, he draws his conclusions largely from studies of a single industry (restaurants) for a short period of time, and he doesn’t consider alternative anti-poverty measures that would arguably be a vast improvement over any minimum wage. Maybe someday I’ll delve more deeply into his studies and related studies (if someone would like to finance such a project, please let me know).
But, for now, at least we’ve seen an important concession even from the far-left reaches of the American political landscape: Yes, minimum wage laws can throw people out of work.
As I wrote recently for the Objective Standard, if government imposes “a minimum on what employers may pay so as to establish a ‘living wage,’ logically, there is nothing stopping government from also imposing a maximum wage.” Now, just a few days later, Vox has come out with an article, “The Case for a Maximum Wage.” The author, Matthew Yglesias, maintains a fantasy that a “super-tax” (or something like it) might “avoid seriously reducing the number of hours people work.” But obviously a maximum wage—either absolute or de facto via the tax code—would discourage some of the most productive people from producing (or would encourage them to move). I’m reminded of a 2011 union rally in Denver in which some people chanted, “Eat the rich!” Morally, a maximum wage is an outrage that violates people’s moral rights to associate voluntarily and to operate their businesses and run their lives as they see fit.
Kristen Bell is a great actor and singer but a terrible economist and political scientist. In my Objective Standard blog post I take her to task for advocating a higher minimum wage.