The Minimum-Wage Myths
The arguments in its favor are emotional appeals and distortions of economic reality.

Rallying for a $15 minimum wage in Detroit, Mich.


Kevin D. Williamson

The perennial fight over the minimum wage is once again in bloom, and the usual arguments will be rehearsed on both sides. Those against raising the minimum wage will cite Economics 101: Raise the price of something and demand will go down. Those in favor of raising the minimum wage will harrumph in the face of economics and declare that their opponents, and economics, hate poor people.

The purpose of this fight is not to hash out economic questions related to low-income people. The purpose of the fight is the fight: There is no minimum wage high enough to keep the Democrats from introducing an increase next year, because the point of bills hiking the minimum wage is to force Republicans to vote against them, which provides Democrats with a moment of cherished political theater. They do not give a fig about poor people — as everybody knows, the real minimum wage is $0.00, and more Americans today are making that than at any time in recent memory, which is what is meant by “record low workforce-participation rates.”

But let’s pretend like those pushing the new increase are not a gaggle of cynical charlatans building their political power on the backs of the poor and the unemployed and examine their arguments.

Why would you want to raise the minimum wage? A few possibilities:

1. Minimum-wage workers are worth more than we pay them. That is a meaningless statement; labor, like apples and oranges and widgets, is worth what you can sell it for. If you believe that we have a large supply of low-wage workers who are secretly more skilled and productive than they let on, you have to assume that everybody in the question — the workers, their employers, their employers’ competitors — has somehow overlooked that fact, but that our ingenious friends in Washington have special insight into the conditions of people they have never met and markets they have never operated in. That’s fanciful.

2. Slight variation: You might want to raise the minimum wage because you think that markets can set prices for most things but not prices for labor. This is contrary to pretty much all of the economic evidence in existence on the question, so maybe you want to refine that and argue instead that markets may do a pretty good job of setting prices for labor, but they don’t do a good job of setting prices for labor when those laborers are at the lower end of the market. Another way of saying this is that you believe that low-income people are too stupid and hopeless to negotiate appropriate, market-value wages for themselves, and that the vast majority of businesses that employ minimum-wage labor are operated by people too stupid to see that there’s a lot of higher-value labor out there for the taking that they are simply too thick to avail themselves of. But that isn’t really an argument for a higher minimum wage; it’s an argument for a more generous food-stamp program. It’s sort of uncomfortable to argue that low-income people are too stupid to see after themselves, but that is, after all, the assumption behind things like Medicaid and Section 8 housing vouchers and food stamps — if low-income people could be trusted to make appropriate choices about things like health care and housing, we could just give them money and let them make their own decisions about whether they need an extra $1 in health care or an extra $1 in groceries. In any case, it’s not likely that that millions of low-income people are too dumb and shiftless to seek higher wages but are smart and enterprising enough to compete for those higher-wage positions.

3. You might want to raise the minimum wage because you think that low-income people “should” make more money. The word “should,” however, has no meaning at all when it comes to questions of prices — if tomorrow people start paying more for Hyundais than for Ferraris, are we going to lecture them that the Ferrari “should” cost more? People assign their own values to things, and your opinion of the value they assign does not change anything about that. An hour of Bob’s labor is not more valuable just because you really, really wish it were so — if you really believed it were worth more, Bob would be working for you.