Tuesday, November 4, 2014

Without Minimum Wage Laws, Would General Wages Plummet?

As an aside to yesterday's post concerning the NJ Star-Ledger editorial Minimum wage: Fine for you, not for me, I came across comments to the effect that without minimum wage laws, wages in general would plummet.

Here are the statements:

"If you let businesses get by with $4-$5 wages, it only encourages them to lower the wage, figuring you're going to go along.

“[A] free choice society...sounds like a downwardly mobile libertarian society to me.”

In answer to this correspondent, I replied:

Then how do you explain the fact that in 2013, just 4.3% of hourly workers in America earned minimum wage or less—down from 13.4% in 1979, just before the era of modest deregulation and lower tax rates commenced. Sounds to me like more liberty fosters upward mobility.

I guess the correspondent never figured that ambitious people wouldn't “go along,” and would seek employment elsewhere in search of higher pay; or that plenty of employers stand ready to draw workers away from those employers who pay sub-market wages. Like all minimum wage supporters, this correspondent needs a good economics textbook.

Related Reading:

Henry Hazlitt on Minimum Wage Laws

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