I just finished listening to the Intelligence Squared debate
on abolishing the minimum wage, which took place back in April 2013. I felt compelled to share a different perspective on the issue. Specifically, I focus on the price-fixing effects of a
federally-mandated minimum wage and the possibility that the minimum wage acts to depress
wages below the market-clearing level.
The Intelligence Squared debate was drawn along predictable lines. The opponents claimed that the minimum wage
artificially raised the cost of workers which prompted employers to cut
jobs. In effect, the minimum wage hurts
the people it is intended to help by depriving them of jobs. Proponents countered that there was no statistical
evidence of such effect and argued for the minimum wage on moral as well as economic grounds.
The entire debate was based on the premise that abolishing
the minimum wage would lead to a decline in pay for low-skilled labor. What if that were false? What if the minimum wage artificially
depressed wages below the market-clearing level? What if the actual impact of the minimum wage
is to confine low-skilled workers to poverty while employers enjoy excess
profits protected by law?