Wednesday, February 13, 2013

The problem with the minimum wage

This is the best illustration I have ever seen of the fundamental problem with government setting a "minimum wage." As Mark Perry notes in a fascinating post on the subject, only about 2% of the 135 million people with jobs today earn the minimum wage or less. If the minimum wage is set too high, then younger and inexperienced workers never get a chance to work, because employers can't afford to hire someone that is expensive but has no experience or talents or a track record of success.

UPDATE: Keith Hennessy adds some meat to this argument.


Highgamma said...

Or they develop technologies that eliminate the minimum wage job altogether (especially when we factor in Obamacare).

Gloeschi said...

Right - since those who work in sectors exempt from minimum wage are paid 'fairly' by the invisible hand of the market?

fboness said...

Many years ago when teen Boomers were paid $1.10/hr you had gas station attendants who pumped gas, washed windshields, and checked oil. Those jobs are long gone. The work still gets done but, now you pump your own gas at the true minimum wage of zero.