The minimum wage is going up for the third year in a row, effective today. The new wage floor is $7.25 per hour.
Young people with little or no work experience may not be able to offer $7.25 per hour worth of productivity; no wonder so many of them are having trouble finding summer jobs. They have to be paid more than they are worth. Wage floors reduce the number of jobs.
Alex Tabarrok also explains why minimum wage laws are inherently anti-competitive. Some employers support wage floors, which is surprising at first glance.
But suppose a company has higher labor costs than its competitors. If they can’t cut their own costs to compete, why not just pass a law to increase their rivals’ costs? Tabbarok also observes, “This is why unions have typically been in favor of the minimum wage even when their own workers make much more than the minimum.”
Lost jobs and a less competitive economy, in other words. And minimum wage hikes still routinely poll at over 80% in favor. One of life’s mysteries, that.