The Hidden Costs of a Minimum Wage - Art Carden - Mises Institute

The Hidden Costs of a Minimum Wage - Art Carden - Mises Institute: "Anyone who has taken an introductory economics course is familiar with the idea that a minimum wage leads to a reduction in the demand for labor and an increase in the supply of labor in the relevant market — usually, the market for low-skill workers. The minimum wage removes the ability of some workers to compete by accepting lower wages and shuts them out of the labor force. As a result, it reduces job opportunities for these workers. A minimum wage breaks the hinges on the door of opportunity."

"For example, one effect of a minimum wage is to reduce the availability of on-the-job training, since more resources are required simply to hire and retain a workforce."

"Suppose that a job can be done by either three unskilled workers or two skilled workers. If the unskilled wage is $5 per hour and the skilled wage is $8 per hour, the firm will use unskilled labor and produce the output at a cost of $15. However, if we impose a minimum wage to $6 per hour, the firm will instead use two skilled workers and produce for $16 as opposed to the $18 cost of using unskilled workers. In the "official data" this shows up as a small job loss — in this case, only one job — but we see an increase in average wages to eight dollars per hour in spite of the fact that the least skilled workers are now unemployed."

"Advocates of higher minimum wages are often motivated by the purest of concerns for the poor. However, the minimum wage has been described as a "maximum folly" by many economists for many years because it hurts precisely the people who most desperately need help. Self-styled friends of the poor are unrelenting in their advocacy of a higher minimum wage, but with friends like these, the poor do not need enemies."