Addressing the Minimum Wage "Debate"
It really bothers me when people talk about the minimum wage. The fact that we even have a minimum wage somewhat indicates the constant pressure internal to the system to depress wages as much as possible. I want to discuss a very annoyingly common talking point propagated by non-economists, to clear up the misinformation: “raise the minimum wage, get inflation and fewer jobs”. The cliché “raise the minimum wage, get inflation and fewer jobs” is misleading because it treats a conditional result from a narrow textbook model as if it were a universal empirical law. In economics, that is backwards: the prediction depends on assumptions, and the evidence is mixed, context-dependent, and often much less dramatic than the slogan implies. The slogan mistakes a model assumption for a fact. The clean “higher wage floor → lower employment” result comes from the standard competitive model: firms are ...
