The Minimum Wage Harm that Few Are Talking About
By David Henderson
Ball State University economists Philip R.P. Coelho and James E. McClure wrote a short piece recently that makes an obvious and telling point. But even though it’s obvious, few people who discuss the minimum wage are talking about it. And that’s tragic.
Economic analysis focuses almost exclusively upon what will happen to unemployment with an increase in the minimum wages; ignored is the harm that current levels create. Minimum wages deprive the mentally and physically disabled, the least skilled, least educated and most inexperienced workers a chance to compete with more able, skilled, educated and experienced workers for jobs by working for lower wages.
The “low” wages the disadvantaged are paid do not reflect the dollar value of the additional training, skills, education and experience they receive. Focusing solely on money wages obscures economic reality; the disadvantaged receive both money and additional human capital that only comes from being employed.
The evidence that the most disadvantaged of society are those most adversely affected by minimum-wage legislation is abundant; it is intuitive, empirical and anecdotal. On the intuitive level, about one in 700 babies are born with Down syndrome; most adults with it are unemployed, and most of those whom are employed are in sheltered workshops where they acquire few job skills. The law does exempt disabled workers (which presumptively includes those with Down syndrome) to be employed at sub-minimum wages. However, the regulations are so labyrinthine, obscure and subject to continual reviews that they may result in substantial sanctions that profit-seeking firms will justifiably ignore the possibility of employing the disabled at less than minimum wages. Rhetorical question: When was the last time you saw someone with Down syndrome working at Starbucks?
The evidence is intuitive and anecdotal. I’m not sure how empirical it is. But they make a good point.