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Do minimum wage laws make the poor richer?

“You think minimum height restrictions make children taller?”

– Luke McCormick, who I think has finally found the minimal summary of minimum wage laws.

19 comments to Do minimum wage laws make the poor richer?

  • Paul Marks

    Quite so.

    The laws of political economy are just as much natural laws as the laws of the physical universe (basically what Edmund Burke says in his Thoughts and Details on Scarcity – and said so often in Parliament and outside over DECADES).

    The idea that some “legislature” can pass a law that repeals supply and demand (for example increases wages – without negative consequences) is as absurd as a “legislature” passing a law repealing the law of gravity.

    People are free to defy the natural laws of the universe (for example to throw themselves into volcanos), but we are not free of the consequences of such folly.

    “Economists” (such as Krugman and Stiglitz) who think that the state can beneficially try and trump supply-and-demand are not really economists at all.

  • Clovis Sangrail

    Some of the consequences were planned:
    “[Sidney] Webb actually saw disemployment as the desired effect of the minimum wage. The idea was that a high minimum wage would shield the “deserving” workers from competition by the unfit by making it illegal to work for less than a certain amount. If wage-determination was left to the market, the unfit would be able to find work, even if badly paid. Even if they were considered incapable of outdoing their superiors, they were capable of “under-living” them because of a biological predisposition. “

  • bloke in spain

    Taking the quote literally, the answer would be yes. You’d be culling the shorter ones.

    Your reaction to that solution might indicate the subject under discussion is less minimal than the quote suggests.

  • Fraser Orr

    You know minimum height laws do make things better for some people. If you increase the minimum height law, lines at the roller coaster get shorter, and so taller people get to ride more often. So some people get richer (fun-wise) due to minimum height laws.

    Of course there is a second order effect — if the reduced number of riders decreases the profit of the roller coaster owner, then the coaster might well get shut down, and everybody looses. But second order effects aren’t all that interesting when you are hitting the negative g’s.

  • veryretired

    Progs don’t care what the law actually does as long as it appears to intend some noble purpose.

    It’s the intention that matters, not any actual consequences.

  • PapayaSF

    Clovis Sangrail: Yes. The minimum wage was also supposed to disemploy white women, so that they would stay home and have babies instead, and disemploy blacks, so that they would be less able to afford children. (Back in the distant past, before the government paid the poor to have children.) In modern parlance, it was a sexist and racist eugenics measure.

    And a quote from P. J. O’Rourke:

    ”The free market is not a creed or an ideology that political conservatives, libertarians, and Ayn Rand acolytes want Americans to take on faith. The free market is simply a measurement. The free market tells us what people are willing to pay for a given thing at a given moment. That’s all the free market does. The free market is a bathroom scale. We may not like what we see when we step on the bathroom scale, but we can’t pass a law making ourselves weigh 165. Liberals and leftists think we can.”

  • Nick (nice-guy) Gray

    We here in Australia had a famous case some years ago. Two students were working part-time in a local shop, but not as long as the union conditions stipulated, so a Federal Parliamentarian intervened, and had then fired. That member of Parliament went on to become our first female Prime Minister!
    And our Australian car factories are closing down. Partly this is due to the high value of our dollar, but it is also due to the feather-bedding and award conditions that companies are obliged to accept, so they are reluctant to employ more people, especially as it would be so hard to fire them (like France and India today). This is similar to minimum-wage laws.

  • Mr Ed


    We may not like what we see when we step on the bathroom scale, but we can’t pass a law making ourselves weigh 165. Liberals and leftists think we can.”

    Mr O’Rourke knows that socialists can pass laws leading to weight loss, but through starvation, as in The Ukraine, Ethiopia etc.

  • Stonyground

    Doesn’t the Millipede’s promise to cap household energy bills reflect the same kind of thinking?

  • staghounds

    I’m always struck by the fact that those wanting to increase the minimum wage want to keep people poor with a petty little 10% increase. That’s nothing.

    I mean, why not 50 an hour? Why do you want to keep people poor?

  • Puncheon

    As any fool knows, socialism is the most effective political system yet devised to keep poor people poor. That’s why there are so many super-rich socialists – don’t want the oiks moving in next door, sending their children to the same school as ours, and competing for the champagne, now do we.

  • PersonFromPorlock

    After Krugman’s recent NYT op-ed predicting only positive consequences for a $15/hr minimum wage, I suggested that in that case there was every reason for New York City to impose one on its own.

    So far, the response has been, um, muted.

  • PapayaSF

    Back in the ’90s, before Krugman became a partisan hack, he argued against a minimum wage.

  • Paul Marks

    Nice point PapayaSF

  • Perry Metzger (New York, USA)

    PersonFromPorlock: FYI, the New York City Council will almost certainly be passing some sort of increased minimum wage, possibly quite a high one, now that de Blasio is to be the new mayor.

    He also intends to raise taxes, as New York City’s income taxes (the highest combined tax burden in the United States) are apparently not high enough.

    It is enough to make one nostalgic for Bloomberg, and he hasn’t even left office yet.

  • PersonFromPorlock

    Perry Metzger (New York, USA)
    December 13, 2013 at 10:50 pm

    It is enough to make one nostalgic for Bloomberg….

    Steady, man! Think of the wonderful lesson you’ll be providing the rest of the country and be proud.

  • Paul Marks

    Perry M. – yes.

    New York City was already living on borrowed time.

    It is a place where to support some forms of statism is quite rational – after all the flow of credit money from the New York Federal Reserve is what keeps the financial services industry (not just the banks – but the Stock Exchange and so on) running. Even before the Federal Reserve Board was created in 1913 the New York Banks were artificially favoured (by the National Banking Acts – other banks were not allowed to “discount” their debt paper).

    However, even in New York City supporting Mr change-his-name is not rational.

    And the people have done – they have voted for this beast (voted for him overwhelmingly).

    They must now suffer the consequences of their folly.