Seinfeld, Costanza, and the Minimum Wage
In response to yesterday’s post about the minimum wage, Bruce Bartlett mentioned an episode of Seinfeld. That, plus the comment after Bruce’s, made me think of a different Seinfeld episode. One of the major points I made in yesterday’s post is that those already paying the minimum wage are helped, not hurt, by a minimum wage increase imposed on their lower-wage competitors. The second commenter, Chris, took issue with that, writing:
I think the NYT reporter was correct to express initial surprise. The dollar cost might be zero, but there is a cost to the competitve advantage such a firm [a higher-wage firm] enjoys in attracting marginally more productive workers.
I think Chris’s point is incorrect and, believe it or not, the easiest way to see that is to remember another episode of Seinfeld. Here’s what I wrote in November 2006:
When the minimum wage goes up, jobs that wouldn’t have been attractive to some people will be attractive to them. But the objection to the minimum wage has never been about whether more people would be willing to work at a higher wage than would be willing to work at a lower wage. The problem is that being willing to work at a job isn’t enough: someone has to be willing to offer you that job. If simple willingness to work were enough to get you a job, then a classic “Seinfeld” episode wouldn’t have been funny. In that episode George Costanza is out of work and wants a job. He sits around with Jerry Seinfeld trying to decide what kind of job he should get. George comes up with the idea of being a sports commentator and lays out how much fun that would be. The audience laughs because they realize that George’s simple willingness to work is not enough: another necessary condition is that someone think he’s good enough to be worth the high pay that sports commentators get.
In the article that this quote is taken from, I was pointing out that a Michael Dukakis proposal to help Americans at the expense of illegal immigrants by raising the minimum wage made no sense and, in fact, would do the opposite. But the point with the woman paying the higher-than-minimum wage is the same. She would not be hurt by her competitors being forced to pay a higher minimum wage because the problem is that the minimum wage constrains the demand side, not the supply side. Indeed, by increasing the effective supply to her, the minimum wage could even allow her to reduce the wage she pays.