Legislation that places a lower limit on the prices paid for labor

Minimum wage law is the body of law which prohibits employers from hiring employees or workers for less than a given hourly, daily or monthly minimum wage. More than 90% of all countries have some kind of minimum wage legislation.


Diversity, Yes; Force, No, by Christopher Westley, Mises Daily, 18 Dec 2006
"Prior to the first federal minimum wage bill passed on the 1930s, there was virtually no difference between black and white teenage (i.e., unskilled) unemployment ... After the minimum age bill is passed, however, we see an increase in black teenage unemployment relative to whites, since ... employers ... no longer incur a market penalty for allowing racism to dictate their market decisions."
Does Business Need Washington To Manage Wages?, by Robert P. Murphy, Mises Daily, 15 Jan 2006
"Remember that the consumer can always choose to forgo a product or service altogether, or to produce it outside of the market. If the government hiked the minimum wage to, say, $50 per hour, this would annihilate the child care industry, as plenty of working parents would elect to stay home with the kids."
Eugen von Böhm-Bawerk: A Sesquicentennial Appreciation, by Richard Ebeling, The Freeman, Feb 2001
Broad biographical essay, including Böhm-Bawerk relationships with Menger, Mises and Schumpeter, and his two major works
"... trade unions, suffer from a false conception that through their use or the threat of force, they are able to raise wages permanently above the market's estimate of the value of various types of labor. Arbitrarily setting wages and prices higher than what employers and buyers think labor and goods are worth merely prices some labor and goods out of the market. ... when unions impose high nonmarket wages on the employers in an industry, the unions succeed only in temporarily eating into the employers' profit margins and creating the incentive for those employers to leave that sector of the economy and take with them those workers' jobs."
Give America a Raise?, by Sheldon Richman, 5 Feb 2014
Reflects on a remark in the 2014 State of the Union address and explains why legislating a minimum wage tends to harm those it supposedly intends to help
"The minimum wage is directed at low-skilled workers. If government sets or raises the minimum, employers have an incentive to use fewer low-skilled workers; employers will substitute machines where possible (have you seen how automated fast-food restaurants are these days?) or switch to higher-skilled workers. The minimum wage, therefore, harms the people most in need. Some lose jobs, and others looking for jobs won't find them. That is not the only consequence. Some workers might retain their jobs but find that some benefits have vanished: there may be less on-the-job training and fewer workplace amenities."
Related Topic: Prices
How to Help Fast-Food Workers, by Sheldon Richman, 1 Aug 2013
Discusses the strikes by fast food workers demanding doubling of the minimum wage, the economic realities behind wages and alternatives that would truly help
"This week, fast-food workers have engaged in 24-hour strikes ... demanding an increase in the minimum wage from $7.25 to $15 an hour ... The low minimum wage, however, is not the cause of their problems ... Those who fixate on the minimum wage unwittingly do struggling workers a disservice. ... What's wrong with simply doubling the minimum wage? The answer is that wages are not arbitrarily set. ... in an extreme hypothetical example, in which the minimum wage in the fast-food industry is raised to $100 an hour. What would happen to employment? It's easy to see that it would plummet as the industry itself faded away."
Related Topics: Occupational Licensing, Wages
Interview with Adam Smith [via Edwin West], by E. G. West, The Region, Jun 1994
Professor Edwin G. West stands in for Adam Smith and answers questions from the Federal Reserve Bank of Minneapolis banking and policy issues magazine
"As one final example of modern sophistry concerning regulations that are heralded as protections for the poor, consider legislated minimum wages in the United States. The legislation restricts a worker from the full ability to price himself/herself into the labor market and therefore increases the probability of his/her unemployment."
"Living wage" kills jobs, by Thomas Sowell, 5 Nov 2003
Explains what a "living wage" is supposed to be and the effect that "artificially higher wage rates" have on employment
"Just what is a living wage? It usually means enough income to support a family of four on one paycheck. ... According to a recent study ... fewer than one out of five minimum wage workers has a family to support. These are usually young people just starting out. ... What the so-called living wage really amounts to is simply a local minimum wage policy requiring much higher pay rates than the federal minimum wage law. It's a new minimum wage. ... Neither the advocates of this new minimum wage policy nor the media — much less politicians — show any interest whatsoever in facts about the consequences of minimum wage laws."
Related Topic: Unemployment
Milton Friedman RIP, by Walter Block, Mises Daily, 16 Nov 2006
In memoriam, focusing on Friedman's positives and including several personal recollections
"Milton was a beacon of light on issues such as the minimum wage law, free trade, and rent control. This might not seem like much to radical libertarians, but, what with the Democrats recently seizing more power, and promising to impose wage levels on those who can least afford them, the unskilled poor, and with hundreds of economists signing a petition in support of this truly vicious and pernicious legislation, Milton's valiant, witty, wise, eloquent and yes, I'll say it, inspirational analysis on this issue must stand out as an example to us all."
Minimum wage, Maximum folly, by Walter E. Williams, 23 Mar 2005
Discusses proposals by senators Kennedy and Santorum to increase minimum wage rates, both of which failed to pass, and the effects of such laws, particularly regarding black teen unemployment
"The idea that minimum wage legislation is an anti-poverty tool is simply sheer nonsense. Were it an anti-poverty weapon, we might save loads of foreign aid expenditures simply by advising legislators in the world's poorest countries, such as Haiti, Bangladesh and Ethiopia, to legislate higher minimum wages. Even applied to the United States, there's little evidence suggesting that increases in the minimum wage help the poor. Plus, according to the [BLS], only 2.2 percent of working adults earn the minimum wage. ... one effect of minimum wages is that of discriminating against the employment of low-skilled workers."
Related Topic: Unemployment
Minimum Wage, Maximum Folly, by Walter E. Williams, 18 May 1999
Examines the impact of minimum wage increases proposed by president Clinton and members of Congress, explaining who are the real beneficiaries of such laws and suggesting that the Welfare-to-Work and Work Opportunity tax credits are not solutions
"To understand how people can benefit from the minimum wage, let's examine the general principle of Congress setting minimum prices using a non-labor example. Businessmen and labor unions frequently belly-ache about foreign manufacturers charging too low a price for a product. They call on Congress or the White House to bully foreign manufacturers to raise their produce prices ... Their sole motivation is to set higher minimum prices on foreign goods so they can get away with charging higher prices for American-made goods ... The identical principle explains the union's push for higher minimum wages."
Minimum Wage, Maximum Intervention, Part 1, by Laurence M. Vance, Future of Freedom, Nov 2005
"There was no federal minimum wage in the United States until 1938. ... in Adkins v. Children's Hospital (1923), the Supreme Court ruled that a minimum-wage law ... was 'an unconstitutional interference with the freedom of contract included within the guaranties of the Due Process clause of the Fifth Amendment.'"
Minimum Wage, Maximum Intervention, Part 2, by Laurence M. Vance, Future of Freedom, Dec 2005
"... raising the minimum wage has everything to do with politics and nothing to do with economics. ... those who are looking for an entry-level job ... are happy to see any increase ... And so are the politicians in Congress, who are trying to pick up votes while they pander to the numerous 'anti-poverty' special-interest groups."
Minimum Wage Rates, by Ludwig von Mises, Human Action, 1949
Chapter 30, "Interference With the Structure of Prices", Section 3; discusses the setting of minimun wages both by legislation and by collecitve bargaining, pointing out some of the resulting problems
"The advocates of minimum wage rates, whether decreed and enforced by government or by violent action, contend that they are fighting for the improvement of the conditions of the working masses. ... However, the problem is precisely whether there is any means for raising the standard of living of all those eager to work other than raising the marginal productivity of labor by accelerating the increase of capital as compared with population."
Mythology of the Minimum Wage, by D. W. MacKenzie, Mises Daily, 3 May 2006
"The economic case against minimum wage laws is simple. Employers pay a wage no higher than the value of an additional hour's work. Raising minimum wages forces employers to dismiss low productivity workers. This policy has the largest affect on those with the least education, job experience, and maturity."
Power to the Individual, Not to the State, by Sheldon Richman, 29 Apr 2015
Discusses the progressive movement to increase the minimum wage to $15 and proposes a more radical solution
"Why do people forget the Law of Demand when low-skilled labor services are under discussion? Doesn't it stand to reason that if the government mandates a higher price (wage) for low-skilled labor, buyers (employers) will demand smaller quantities of it (hire fewer workers)? Why would this particular law of human action be different in just this one area? That makes no sense. It at least requires an explanation."
Professor Stiglitz and the Minimum Wage, by Vedran Vuk, Mises Daily, 4 Sep 2006
"... Stiglitz's original comment stands. Unemployment is the problem, not wages. If unemployment is the real problem why would he lend is his support to a policy that will only increase it? Minimum wage is a great political tool for politicians. The minimum wage promises that wages will go up without any negative effects. To the common person, this seems like a great idea."
Radical Economics: An Interview with Walter Block, by Walter Block, Austrian Economics Newsletter, 1999
Discusses topics such as the effect of Rothbard's death, Block's own intellectual development, the legality of blackmail and barriers to Austrians in academia
"I was very impressed during the recent debate on the minimum wage, Card and Krueger came out with evidence that increasing the minimum wage did not increase unemployment; quite the contrary. In effect, they were claiming that economic law did not work in Pennsylvania and New Jersey. Mainstream economists, who have otherwise pledged themselves to the positivist program, did not say: well, that's what the data show. Not at all. Instead, they were apoplectic. They leapt to their feet and said: something is wrong with this study. ... in the end, they were right. The study was deeply flawed ..."
Sense and Nonsense on the Minimum Wage [PDF], by Donald Deere, Kevin M. Murphy, Finis Welch, Regulation, 1995
"The reduction in employment that results from increases in the minimum wage, which is concentrated among those workers with the fewest skills, is the cruel 'dark side' of such legislation. ... It is not that there are too many low-wage jobs, but that there are not enough jobs for low-wage workers; and minimum wages make things worse."
The Bridge of Asses, by Lew Rockwell, Mises Daily, 2 Oct 2003
Argues that minimum wage legislation is "the pons asinorum of the relationship between economics and politics", explaining that labor prices (wages) are no different from other prices in the marketplace
"The reason a person works is precisely so that the person will not live in poverty. The minimum wage law does nothing but specify the floor below which a person may not work, and thus it can only, on the margin, increase the likelihood of poverty. ... the really important point concerns the effect on the worker ... It says to the worker, in effect: you may not offer too low a price for what you have to offer or else the government will show up and crack some skulls. Thus it doesn't do any favors to the worker; instead it removes the control that the person has over the conditions under which he or she may offer to work."
The Living Wage Folly, by Charles W. Baird, The Freeman, Jun 2002
"... researchers have pointed out a unique harm done by LWOs. ... High school dropouts learn that in wage determination, politics trumps education and training, and the more productive learn that their training and education provide fewer advantages ... younger people still in school will have less of an incentive to stay there. "
The Minimum Wage: Washingtons Perennial Myth [PDF], by Matt Kibbe, 23 May 1988
"... if the government coercively raises the price of some good (such as labor) above its market value, the demand for that good will fall, and some of the supply will become 'disemployed.' Unfortunately, in the case of minimum wages, the disemployed goods are human beings."
The Miraculous Minimum Wage, by James Ostrowski, 1 Sep 2000
"... let's raise the minimum wage to $15.00 an hour ... We deal with that by passing a maximum price law ... pass a law making it illegal to fire anyone because of a minimum wage law increase ... put some words on legislative paper to the effect that any employer who goes out of business because of the minimum wage law is guilty of a felony ..."
The Political Hoax Exposed, by Lew Rockwell, Mises Daily, 10 Sep 2006
Compares the positions of the Democrat and Republican candidates for governor of Alabama regarding increasing the minimum wage, to demonstrate their lack of understanding of economics
"Once you strip away the rhetoric, a minimum wage law simply outlaws work below some state-mandated wage floor. Furthermore, a business that hires a person who is less productive than the minimum can be fined and shut down, and a worker who dares price his services too low will be forced to stop. ... Now, ask yourself: how can poor working people be made better off by laws that restrict their options? ... Poor people and young workers, and the old and the disabled, have few economic tools at their disposal. One of them is the freedom to lower the price of their labor. The minimum wage makes that impossible."
Related Topics: Alabama, Politics
Unemployment by Legal Decree, by Bettina Bien Greaves, The Freeman, Aug 1956
Discusses the $1.00 an hour minimum wage law passed in March 1956 and its effects, in particular, in Puerto Rico where the legal minimum appeared to be already too high for that market
"A minimum wage law, they would have us believe, is the open sesame to the Utopia of higher living standards for everyone, particularly for the poor. But is it? ... These men ... were recognizing a simple economic principle. Goods or services, priced higher than demand justifies, will not find a buyer on a free market. ... The theory applies in the same way, whether one is dealing with the price of wheat, cotton, butter, or an hour of a man's labor. ... If a minimum wage rate is set higher than the market rate, it hurts the very persons it is designed to help—the lowest producers, and hence the lowest earners."
Related Topics: Unemployment, Wages
War Loses, Again, by Lew Rockwell, 8 Nov 2006
Reflects on the results of the 2006 U.S. mid-term elections, both what voters thought about the Iraq War and lost opportunities by the Republicans in reducing economic interventions
"The bad news is that the party that has failed has also taken down some good ideas, among which is that vast increases in the minimum wage are bad for working people. The Republicans campaigned against the many ballot initiatives raising the minimum wage. Six states approved increases in the minimum wage. None of the increases will be devastating to the economies of these states, since they are still low in real terms. But one can only be aghast at the economic ignorance behind such ballots, which are pushed by unionized, high-wage workers precisely to block low-wage workers from entering into job competition."
When More Is Less, by Alan Reynolds, 25 Jul 2004
"Cutting off the lowest rung on the ladder of opportunity may please some members of labor organizations who are much higher on the ladder, because it reduces future competition for better jobs. But to attributing compassion to an increased minimum wage is the opposite of its most obvious effect."

Cartoons and Comic Strips

Compassionate Politicians Helping the Poor, by Chuck Asay, Colorado Springs Gazette Telegraph, 13 Nov 2006
The Cost of Gov't. "Compassion", by Chuck Asay, Colorado Springs Gazette Telegraph, 4 Jan 2007


Minimum Wage, Maximum Damage: How the Minimum Wage Law Destroys Jobs, Perpetuates Poverty, and Erodes Freedom, by Jim Cox, May 2004
Offered by the Advocates for Self-Government


Economics: Is Raising Minimum Wage A Bad Idea? - Learn Liberty, by Donald J. Boudreaux, 14 Jan 2016
Discusses three reasons why mandating a $15 minimum wage is counterproductive: it kills jobs, it hurts those most in need of help and coercive laws aren't necessary since businesses voluntarily give raises to deserving employees

How does minimum wage hurt workers? (again), by Tomasz Kaye, 29 Mar 2012
Animated illustration of the effects of legislated minimum wages

Nancy Pelosi's Double Standard on the Minimum Wage, by Jan Helfeld, 23 Aug 2008
Interview with the Speaker of the House about how much she pays her interns
Panel Discussion on Minimum Wage, by Mary Ruwart, 9 Jul 2014
Debate held at the 2014 FreedomFest between Mary Ruwart and Jeff Waddoups, professor of economics at the University of Nevada, Las Vegas
Schools of Thought in Classical Liberalism, Part 2: Milton Friedman and the Chicago School, by Nigel Ashford, 9 May 2012
Short video, with transcript; discusses the answers to the question "What is the proper role of government?" from the viewpoint of Milton Friedman and the Chicago School of economics
"... if you increase the minimum wage, the result of that will be that lower-skilled workers will find it more difficult to find employment. And you can test that with empirical evidence. ... there are many other government policies, which might actually achieve their goals, the positive, intended consequences of policies, but it ignores the negative, unintended consequences of those policies. So for example, raising the minimum wage, there are some people who benefit ... they get a higher income ... But it ignores the negative, unintended consequences ... larger numbers of people can't get jobs at all."

The introductory paragraph uses material from the Wikipedia article "Minimum wage law" as of 06 Nov 2018, which is released under the Creative Commons Attribution-Share-Alike License 3.0.