Refuting an absurd claim

Defenders of the minimum wage have taken to making the absurd claim that increasing it has no impact on employment. In the letter below, Don Boudreaux spars with one of those zealots. Read it and enjoy:

24 August 2015

Editor, The Washington Post

Dear Editor:

Extraordinary claims must be backed by extraordinary evidence before people accept such claims as valid. And so the extraordinary claim made by Rachel West that using minimum-wage legislation to raise firms’ costs of employing low-skilled workers does not cause firms to employ fewer low-skilled workers ought not be accepted just because she points to one study that supports her claim (Letters, August 24). For every study that she points to in support of her claim, I can point to a study that refutes it.* The fact is, empirically detecting in a globalized and highly dynamic economy the full consequences on employment of legislation that directly affects less than five percent of the workforce is very difficult.

So rather than play a game of Dueling Studies to decide whether or not to put at risk with minimum-wage legislation the employment prospects of hundreds of thousands, and perhaps millions, of low-skilled workers, let’s ask a simple yet probing question: Does anyone doubt that fewer people would vote if government raised the cost of voting by imposing a poll tax?

The unambiguous answer is no. Yet the same logic that leads to this answer strongly suggests that firms will employ fewer low-skilled workers when government raises the costs of employing such workers by imposing a minimum wage.

Ms. West will reply that firms differ from voters. But the burden is upon her and other minimum-wage supporters to explain what no one has ever adequately explained – namely, why is it that experienced and profit-hungry business people (most of whom operate in highly competitive industries) are more likely than are voters simply to shrug their shoulders and absorb higher costs imposed by government without taking steps – such as employing fewer low-skilled workers – to reduce their exposure to those higher costs?

Donald J. Boudreaux
Professor of Economics

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