The Illusion of Living Wage Laws - Bill Barnes - Mises Institute

The Illusion of Living Wage Laws - Bill Barnes - Mises Institute: "The data show that the people most likely to be affected by living-wage legislation are black, teenage males. This group had a national unemployment rate of 33.8 percent in 2007. When the data are broken down for black males aged 16 and 17, the unemployment rate is in excess of 40 percent.

These numbers are staggering, and they would only get worse with a living wage. Some teenagers would not even have the option of work because the value of their marginal revenue would not equal their new, higher wage cost.

So, what happens to these people who are left jobless? Well, they still need money and something to do during the day.

Not surprisingly, crime rates are highest among those in their late teens and early twenties. The Georgia Bureau of Investigation cites young people, aged 17–21, as perpetrating 23.4 percent of the crimes in the state.[3]

It is no coincidence that those who cannot find work tend to find things that get them into trouble to fill their time. I argue that enactment of a living wage would only put more young people on the streets rather than in jobs where they can learn skills that will serve them well in the future.

Not only is this lack of work bad for young people and other low-skilled workers, but it also hurts the local economy. Due to the higher mandated wage, jobs that are not worth this wage will no longer be performed legally in the community. Trash pickup, general cleaning, inexpensive food preparation, farming, and many other tasks would be either neglected or moved to places with lower wage costs.

This general lack of production would not be due to people's lack of desire to do the work, but to government's intervention, which would keep the tasks from being done on the grounds that their monetary value doesn't fit with the social agenda. It may seem desirable to keep people from working for too little money, but keeping people who want those jobs out of work is both an attack on liberty and a mistake in economics."

"Standards of living do not increase with wages, but rather with production. Society needs people to produce at any wage, and then prices will reflect the wages being earned for a given task. Once we look at the living-wage law from the point of view of someone who loses his or her job (as opposed to someone who gets a raise), we see its ugly side.

Ultimately, a living wage in Athens (or anywhere) will actually hurt the poor rather than helping them. It will decrease production, increase counterproductive activity for the least skilled, and increase prices for the entire population. Cities like Athens should encourage work instead, by minimizing regulations on labor and allowing everyone's standard of living to increase with unadulterated production."