larger the number of workers it attempts to cover, and the more it
attempts to raise their wages, the more likely are its harmful effects to
exceed its good effects.
The first thing that happens, for example, when a law is passed that
no one shall be paid less than $30 for a forty-hour week is that no one
who is not worth $30 a week to an employer will be employed at all.
You cannot make a man worth a given amount by making it illegal for
anyone to offer him anything less. You merely deprive him of the
right to earn the amount that his abilities and situation would permit
him to earn, while you deprive the community even of the moderate
services that he is capable of rendering. In brief, for a low wage you
substitute unemployment. You do harm all around, with no comparable compensation.
The only exception to this occurs when a group of workers is
receiving a wage actually below its market worth. This is likely to happen only in special circumstances or localities where competitive
forces do not operate freely or adequately; but nearly all these special
cases could be remedied just as effectively, more flexibly, and with far
less potential harm, by unionization.
It may be thought that if the law forces the payment of a higher
wage in a given industry, that industry can then charge higher prices
for its product, so that the burden of paying the higher wage is merely
shifted to consumers. Such shifts, however, are not easily made, nor
are the consequences of artificial wage raising so easily escaped. A
higher price for the product may not be possible: it may merely drive
consumers to some substitute. Or, if consumers continue to buy the
product of the industry in which wages have been raised, the higher
price will cause them to buy less of it. While some workers in the
industry will be benefited from the higher wage, therefore, others will
be thrown out of employment altogether. On the other hand, if the
price of the product is not raised, marginal producers in the industry
will be driven out of business; so that reduced production and consequent unemployment will merely be brought about in another way.
When such consequences are pointed out, there is a group of people who reply: “Very well; if it is true that the X industry cannot exist
outcome of raising the minimum wage.
just sayin.....
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