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The Economic Denialism of a $15 Minimum Wage

Both California and New York have passed minimum wage legislation that will prevent in relatively short order their citizens from working for less than fifteen dollars an hour.  The New York bill will double the minimum wage. The California bill will increase the minimum wage by fifty percent. Even in a political climate growing increasing hostile to liberty such legislation stands out as an egregiously irresponsible and ignorant intrusion on freedom.

We hear a lot about “denialists” when it comes to climate change, but these enactments represent a massive denial about basic truths of economics. When a commodity—in this case labor—becomes substantially more expensive, people will buy less of it. The result of these laws will more unemployment for the least able among us.

Does anyone doubt that if newspapers, including those who editorialize in favor of such increases, were required by the government to double their subscription price that they would sell substantially fewer newspapers? Or if the government decreed that salaries of tenured professors must be go up by half, that colleges would substitute other kinds of instructional tools for tenured professors?

It is true that there is some research suggesting if the minimum wage is increased to a point still very substantially below the median wage, employment only marginally decreases. But this research has been rebutted, and even the leading researcher making this claim does not believe it justifies a minimum wage hike to fifteen dollars. And today substituting robots, like computerized kiosks, offers employers more opportunities for avoiding a higher wage bill than at the time his study was conducted.

Perhaps the supporters of these minimum wage bills do not care, if they prevent ten, perhaps hundreds, of thousands from working. Jerry Brown claims that a fifteen dollar minimum of wage is matter of “economic justice.” It thus appear just to Brown that a citizen be barred from employment,  if his or her skills do not command fifteen dollars an hour.  But how can this possibly be just? There is enormous social science evidence that being unemployed is a source of great unhappiness, even despair.

And a high minimum wage creates large social costs as well. It imposes a roadblock to getting low skilled individuals into the discipline of work. It impedes the assimilation of immigrants into the community,  creating risks of social unrest.  We see these dangers in European nations, like France, which have high minimum wages, although not as high as fifteen dollars an hour. The actions of New York and California provide yet more evidence of the slow decline of American exceptionalism.

Reader Discussion

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on April 12, 2016 at 14:58:09 pm

Slow decline? The decline has been gathering momentum and is now proceeding at a brisk pace.

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Mark Pulliam
on April 12, 2016 at 15:31:46 pm

You might want to fix the typo, which appears more than once, in which you write "fifteen dollars a year" instead of "an hour."

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djf
on April 12, 2016 at 22:52:54 pm

Professor McGinnis's viewpoint is correct. This law says that you cannot accept a job for less than $15 an hour. IRS has strict rules that likely prevent you working freelance as an independent contractor if you want to bid a lower labor cost for your work. Of course, if you don't require any remuneration or compensation in order to live, you can work for free in many places as an intern, like Monica Lewinsky.

Arianna Huffington brags that she began her business and paid several staffers less than the minimum wage at the time. Liberal/Progressive hypocrisy as usual.

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Terry Seale
on April 13, 2016 at 11:50:16 am

The paper by Neumark and Wascher is really good. Thanks for the link. Good research is always more meaningful than personal opinions.

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Scott Amorian
on April 13, 2016 at 15:49:40 pm

"... like Monica Lewinsky."

It does put a unique spin on the old adage about deriving satisfaction from one's work, doesn't it?

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gabe
on April 14, 2016 at 16:38:11 pm

the tribal headman maintains his authority by handing out goodies and nookie passes and having the most impressive fire ring; all Governors Brown and Cuomo are doing is stoking their fire ring, and their tribe is applauding and going all moist, as usual; that's all this is; it's tribal; the inevitable casualties -- the unemployed, the despairing -- are meaningless; the only people who matter are those angling for a seat near the headman. devil take the hindmost

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grout
on April 18, 2016 at 22:42:24 pm

There is another perspective on higher minimum wages. Initially the hit on labor costs would be somewhat tougher on lower-end businesses, but eventually the higher wage will add to the economy and wealth of the nation. Prices would eventually come around to pay for the higher wage and the burden would then be spread thinner among the people.

It takes a churning of the economy to generate wealth and the larger and more active the churn the greater the wealth produced. Most people spend their lives working producing the goods and services they in turn purchase or use, directly or indirectly, with their salaries, wages and profits.

Of one thing there is little doubt. Poverty is a massive multi-faceted drain on the productivity and quality of a nation. People raised up out of poverty enjoy a higher quality life and their greater earnings add to the value of the economy which in turn benefits everyone. Capitalism is a multi-player more-the-merrier sort of system.

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Edward Tomchin

Law & Liberty welcomes civil and lively discussion of its articles. Abusive comments will not be tolerated. We reserve the right to delete comments - or ban users - without notification or explanation.