Not that anyone cares what Mitt Romney says anymore, but he came out in support of minimum wage on MSNBC’s “Morning Joe” this morning. His reasoning: “[The GOP] is all about more jobs and better pay.”
That’s too bad, because minimum wage does anything create more jobs and better pay. In fact, it does just the opposite. I once wrote about minimum wage for the Mises Institute. I explained why minimum wage outlaws employment below a certain wage rate, leading to unemployment for all workers whose marginal value product — that is, their contribution to their employer’s firm — is below the legal minimum. This hits the lowest-skilled workers hard. Murray Rothbard writes in Making Economic Sense:
If the minimum wage is, in short, raised from $3.35 to $4.55 an hour, the consequence is to disemploy, permanently, those who would have been hired at rates in between those two rates. Since the demand curve for any sort of labor (as for any factor of production) is set by the perceived marginal productivity of that labor, this means that the people who will be disemployed and devastated by the prohibition will be precisely the “marginal” (lowest wage) workers, e.g. blacks and teenagers, the very workers whom the advocates of minimum wage are claiming to foster and protect.
I also note in my article at the Mises Institute that minimum wage is anything but an innocent idea proposed by those with only the best interests of working people in mind. It’s a tool whereby unions can discriminate against laborers willing to work for lower wages — especially against teenagers and immigrants.
So think twice before assuming not only that minimum wage helps poor laborers, but also that it’s advocates have good intentions in mind.