Being calm on the minimum wage
February 16, 2013 5 Comments
Well the President got on TV and said something about raising the minimum wage so that’s our cue in the blogosphere to all start talking about the minimum wage.
I retain and renew my fully-paid-up libertarian credentials on this subject by agreeing with Don Boudreaux about the minimum wage. Yes I do think (as even Matthew Yglesias understands) that if I want to hire someone to do a thing at $X/hour and that someone is willing to do the thing for $X/hour, or vice versa, this arrangement between we two is none of anyone else’s fucking business. Mind your own business. Learn some damn manners. Seriously, who raised you?
More to the point though, my considered belief is that a minimum wage hurts people rather than helps them, that politicians supporting a minimum wage therefore accrue approval-rating points from many of the very people their policy hurts (not all such people though: a big bloc whom it hurts are just ‘teenagers’). But, whatever. I doubt it materially affects me literally all that much. If the poor out there want to reward and fawn over politicians for hurting them, and Smart People want to pat themselves on the back for ‘caring’ about the poor so much that they push policies that hurt them, I find that whole dynamic annoying, perverse and tragic but what else is new.
So please note in your RWCG Daily Reading Diary that I don’t have really hugely emotional feelings about the minimum wage. That’s why it was puzzling to read that I and other conservatives need to calm down about the minimum wage. Okay! Okay! I’ll calm down. I’m taking a deep breath. Well, now that I’ve settled down from my previously oh so highly emotional and irrational state, I have time to read the arguments against the arguments against the minimum wage. What are they?
Essentially it boils down throwing up one’s hands and saying/pretending ‘we don’t know’ what a minimum wage does to employment, as if this policy is oh so subtle and hard to understand and so knowledge about its effects can only come empirically. One is certainly not allowed to use any theory. A priori ground rules have somehow been decided (odd; I must have missed this vote) that before drawing any conclusion whatsoever on this subject we need all sorts of ‘studies’ and ‘data’ and ‘statistics’ to ‘prove’ that conclusion, and that’s impossible anyway, so we permanently don’t know!
This argument is a variation of a This Policy Doesn’t Do What It Does argument. I might think that when the government puts a price floor on labor that has an effect – in the only conceivable possible direction for that effect to point – but I’m not allowed to ever say or think so without untangling this effect perfectly from every last variable with a definitive, complete ‘study’. Which is something that would be impossible for humans to do, hence, the minimum wage is permanently fine.
This know-nothing approach also allows the anti-anti-minimum-wage theorist to poo-poo arguments like Well then why not raise it to $90/hour? That’s ‘silly’, goes the logical, calm argument. It’s just silly! What is left unexplained is where the magical inflection-point occurs between $9 and $90. The anti-anti-minimum-wage theorist apparently knows there is such an inflection-point, and must indeed know where it is (or at least knows a lower-bound for it, so as to be able to know that $9 lies below it), but isn’t divulging anything further than that. Pity. But of course this I’m-not-telling-you-where-the-magical-inflection-point-lies issue plagues all This Policy Doesn’t Do What It Does discussions.
A curious argument is to suggest I’m wrong in my theory because ‘monopsony’. (Such people like to demonstrate that they know the word ‘monopsony’ a lot.) Anyway, it turns out that in a special case called ‘monopsony’, it’s possible for a minimum wage to increase employment. (How ‘it’s possible’ automatically becomes ‘therefore, that’s the situation we’re in!’ is beyond me, but of course I’m not an economist.) More puzzling, the person saying this typically then points to the Wiki page for monopsony without (apparently) having actually read it, because Wiki describes it as ‘one buyer facing many sellers’. The buyer being ‘employer’ and sellers being ‘workers or potential workers’, what on earth this theoretical textbook boundary-state has to do with the actual employment situation in any real-world non-Communist nation-state is beyond me.
And that’s it ladies and gentlemen. That concludes my literature survey of the arguments against arguments against a minimum-wage. Okay, I won’t claim it’s complete. (I’m a pretty lazy researcher.) But at least I’ve calmed down over the whole thing. From my previously hysterical state. So there’s that.