Since its first enactment in New Zealand in 1894[1], minimum wage laws have interfered with the market process of determining the price of labor. Such laws now exist in most countries. Proponents claim that a minimum wage improves living standards and worker morale while reducing inequality and poverty.[2] Libertarians and conservatives have tried ad nauseum to oppose the existence or increase of the minimum wage,[3,4] to little avail. It is therefore necessary to try a different approach. Let us see how minimum wage hikes can undermine the legacy economic system, and thus why one might agree with statists for the wrong reasons.

A minimum wage law makes it illegal to hire laborers for less than a specified rate of payment per unit time. In order to justify paying an employee a given amount, the employer must be getting at least that much value from the employee. (In practice, an employee must be more valuable due to the overhead cost of running a business.) Raising the minimum wage thus renders unemployed anyone who cannot be sufficiently productive to be worth paying the higher wage. Laissez-faire advocates tend to consider this effect as a negative, but perhaps it is not. The people left unemployed by a minimum wage hike can be the types of people that statists claim to want to help, but they also can be political enemies of liberty as well as foreign migrants. Raising the minimum wage can protect domestic workers from competition and demographic displacement while depriving leftist activists of their day jobs. This will shift the political landscape away from socialism.

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References:

  1. American Academy of Political and Social Science. “The Cost of Living”. Philadelphia, 1913.
  2. “Should We Raise The Minimum Wage?”. The Perspective. Aug. 30, 2017.
  3. Black, John (Sep. 18, 2003). Oxford Dictionary of Economics. Oxford University Press. p. 300.
  4. “The Young and the Jobless.” The Wall Street Journal. Oct. 3, 2009.