The folks at LewRockwell.com have posted a chapter from Murray Rothbard's book, Making Economic Sense, that deals with the minimum wage and its effect on the economy. Rothbard, not surprisingly, clearly understands this issue more than any self-serving politician:
- In truth, there is only one way to regard a minimum wage law: it is compulsory unemployment, period. The law says: it is illegal, and therefore criminal, for anyone to hire anyone else below the level of X dollars an hour. This means, plainly and simply, that a large number of free and voluntary wage contracts are now outlawed and hence that there will be a large amount of unemployment. Remember that the minimum wage law provides no jobs; it only outlaws them; and outlawed jobs are the inevitable result. ...
... The advocates of the minimum wage and its periodic boosting reply that all this is scare talk and that minimum wage rates do not and never have caused any unemployment. The proper riposte is to raise them one better; all right, if the minimum wage is such a wonderful anti-poverty measure, and can have no unemployment-raising effects, why are you such pikers? Why you are helping the working poor by such piddling amounts? Why stop at $4.55 an hour? Why not $10 an hour? $100? $1,000?
It is obvious that the minimum wage advocates do not pursue their own logic, because if they push it to such heights, virtually the entire labor force will be disemployed. In short, you can have as much unemployment as you want, simply by pushing the legally minimum wage high enough.
Labels: Economics, Free Market
1 Comments:
Quite surprisingly, libertarian economist Steven Landsburg convincingly argues that the minimum wage is not the job killer that most economists believe it to be. Nonetheless, the Earned Income Tax Credit is a much more effective way of helping the working poor than raising the minimum wage.
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