Economics and Emotions of Minimum Wage

Cross-posted to blog.Mises.org:

The Economics and Emotions of the Minimum Wage

B.K. Marcus

"Chronic unemployment is obviously a political disease that springs from the primitive notion that government can improve everyone's income and working conditions by legislation and regulation."

Hans Sennholz tells the truth: Politics Causes Unemployment -- and the minimum wage laws are only part of the picture.

"Whenever government forcibly raises employment costs it causes marginal labor, that is, labor that barely covers its costs, to become submarginal. It does not matter whether government orders wage rates to rise or benefits to be improved, the workday to be shortened, overtime pay to be raised, funds to be set aside for sickness and old age, or any other benefit to be granted."

While this is true, I continue to find that addressing the minimum wage laws specifically is both the appropriate first step, and often the biggest hurdle for "well intentioned" interventionists. Once you can get someone to confront the logic of price controls, the rest becomes easier.

Jim Cox has a short chapter on minimum wage law in his Concise Guide To Economics. But he has also written a longer treatment of the subject. It is available from The Advocates for Self-Government as Minimum Wage, Maximum Damage.

A slightly earlier version of the same treatment is available online as ...

The Concise Guide to the Minimum Wage

Why is this issue so important?

Because someone who can't grasp the effects of labor price floors won't be able to deal with any other economic issue.

Below I offer my own thoughts on the reasons we're still fighting this important battle when price controls are one of the least complex aspects of economic theory.

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