“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. If the minimum wage is, in short, raised from $3.35 to $4.55 an hour, the consequence is to disemploy, permanently, those who would have been hired at rates in between these two rates. Since the demand curve for any sort of labor (as for any factor of production) is set by the perceived marginal productivity of that labor, this means that the people who will be disemployed and devastated by this prohibition will be precisely the “marginal” (lowest wage) workers, e.g. blacks and teenagers, the very workers whom the advocates of the minimum wage are claiming to foster and protect”. Ludwig von Mises institute
Jun29th2006
Practical, empirical evidence indicates that the minimum wage is not the job killer that most economists theorize it to be. Nonetheless, expanding the Earned Income Tax Credit is a much more effective way of helping the working poor than raising the minimum wage.
On the contrary, empirical evidence does indicate that the minimum wage is a job killer, for example see here, but it is a job killer in proportion to the level the minimum wage is increased. But since the minimum wage has typically been increased in relatively small amounts (dollar here, dollar there), the job losses don’t tend to be dramatic. Small raise in the minimum wage, generally small amount of job losses…