From the Vault: The Negative Effects of the Minimum Wage
By David Henderson
But when the minimum wage law confronts the law of demand, the law of demand wins every time. And the real losers are the most marginal workers–the ones who will be out of a job.
This is a quote from David R. Henderson [me], “The Negative Effects of the Minimum Wage,” National Center for Policy Analysis, Brief Analysis No. 550, May 4, 2006.
Why post it 7 years later? Because in a mass e-mail yesterday, NCPA President John C. Goodman highlighted it.
Here’s another section:
Proponents of a higher minimum wage often argue that that it’s difficult to support a family when the only breadwinner earns the current minimum wage. This claim is flawed, for three reasons.
First, for a minimum-wage increase to help a single breadwinner earn money for his or her family, the worker must have a job and keep it at this higher wage. A job at $5.15 an hour, the current federal minimum, is much better than no job at $6.00 an hour.
Second, increases in the minimum wage actually redistribute income among poor families by giving some higher wages and putting others out of work. A 1997 National Bureau of Economic Research study estimated that the federal minimum-wage hike of 1996 and 1997 actually increased the number of poor families by 4.5 percent.
Third, a relatively small percentage of the workers directly affected are the sole breadwinner in a family with children. A study by the Employment Policies Institute shows that in California, for example, only 20 percent of the workers who would have been directly affected by a proposed 2004 minimum-wage increase were supporting a family on a single, minimum-wage income. The other 80 percent were teenagers or adult children living with their parents, adults living alone, or dual earners in a married couple.