The Unseen Cost of Minimum Wage Laws
The media are never better at displaying their economic illiteracy than when they report on the minimum wage.
"Workers got a raise on Friday when the federal minimum wage was hiked 70 cents to $7.25 an hour," the Christian Science Monitor reported last week. "They'll be shouting, "Olé!"
They assume that if politicians declare that workers should get a raise, they will actually get it. But the idea that government can increase wages by decree with only good consequences rests on a serious economic fallacy: that employers set wages arbitrarily. If wages are very low, it must be that employers are stingy.