Wednesday, November 6, 2013

In Addition to Re-Electing Judas Christie, Voters in NJ Also....

....approved a constitutional amendment that raises the state minimum wage from the federally mandated $7.25 to $8.25 and sets it to increase automatically with inflation.

I believe it is time to bring out Murray Rothbard:
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.

All demand curves are falling, and the demand for hiring labor is no exception. Hence, laws that prohibit employment at any wage that is relevant to the market (a minimum wage of 10 cents an hour would have little or no impact) must result in outlawing employment and hence causing unemployment.

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.

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.


  1. Since we're on the subject of Christie, I feel that this news about him is relevant

  2. and sets it to increase automatically with inflation.

    And despite our efforts, no one seems to understand the inflation is a purposeful government program, not a mysterious and inexplicable force of nature.

  3. "Democracy is the theory that the common people know what they want, and deserve to get it good and hard."

    - H. L. Mencken

    1. It's hard to go wrong with Mencken quotes.

  4. Here in Crazyfornia we have voters who are just as ostentatiously ignorant of basic economics. Jerry & Company have just raised the minimum wage by 25% while claiming that this will be an unqualified boon for low wage workers. Naturally, Governor Clown is hugely popular and a shoe in for re-election.