Emily Peck at Axios Markets writes about the fact that the federal minimum wage has not budged from $7.25 an hour since 2009, 15 years ago.
She then writes:
Why it matters: Though very few people actually earn $7.25 an hour, the federal standard has ripple effects for all hourly workers — helping to keep pay low for millions.
She takes as given the idea that wages move in lockstep. The typical argument for that view is that a manager sees the need to keep some gap between the minimum wage workers and the other more-skilled workers.
That could be, but it’s what Arnold Harberger calls “priceless:” It fails to take account of price theory.
A strong case can be made that keeping the minimum wage low helps pay rise. Why? Think of the workers who start at jobs paying $7.25 per hour. They will typically have few skills but those jobs help them get skills. The fact that the minimum wage is so low allows many of them to be employed, and employed for more hours, than if the minimum wage were higher. With more workers getting more skills, potentially millions of workers get higher pay than if the minimum wage were higher.
To her credit, Peck recognizes how well the labor market works in the absence of high minimum wages, writing:
Still, workers have managed to get raises without the federal standard moving. In recent years as the labor market has been tight, employers have been forced to pay more for hourly workers and an increasing number of states have set higher wage floors.
Then she retreats from price theory again, writing:
About 17 million people are earning less than $15 an hour, according to EPI's low-wage workforce tracker. Raising the wage floor to $15 would give all of them a pay boost.
All? Really? Hard to believe. Surely some would lose their jobs because their productivity is not high enough to make themselves employable at $15 an hour. And even some of those who kept their jobs would find their hours cut. So their overall pay would not necessarily rise.
There is no way to circumvent the inherently racist character and history of the minimum wage. There is no way to evade the reality that increase in MW also increase minority and youth unemployment, and typically overall employment. Stores and retailers, the primary working locations of MW personnel, simply hire older workers with better job skills, lower turnover rates, and better appreciation of timeliness and customer service. Kiosks for food orders are now much lower in cost than MW employees over 16 hours each day for a year. Kiosks are becoming ubiquitous, meaning no workers filling that role anymore. Unemployment is not a pay raise.
None of these observations is new: all have been well documented for decades. Liberals' denial of economics is also not new. As the great Thomas Sowell has said, the first law of economics is scarcity; the first law of politics is to ignore the first law of economics. Minimum wage laws epitomize this.
I'm not sure I completely agree with the conclusion "with more workers getting more skills, potentially millions of workers get higher pay than if the minimum wage were higher." If more workers have more skills, shouldn't that cause the price for high skilled workers to drop, all else being equal?