In a recent post at Cafe Hayek, Professor Donald Boudreaux answers the question, “Why not regard minimum wages as social experiments? If they succeed, great. If not, they can be undone.”
There are a number of reasons Professor Boudreaux cites for why this isn’t a practical way to look at the minimum wage, including politician’s incentives, which are based on politics rather than empirical evidence about the effects of the minimum wage.
Instead, he proposes an alternative minimum wage experiment: “abolish the minimum wage completely and for a long stretch of time, and then see what happens over time.”
The United States has had minimum wage laws for decades. To really see the impact of the minimum wage, Professor Boudreaux argues, we need to compare it to a long period without the minimum wage.
If minimum wage opponents (such as me) are correct, we’ll see over time that elimination of the minimum wage increases the employment of low-skilled workers, as well as eliminating or greatly reducing the differences between the unemployment rates of black and Hispanic low-skilled workers and the unemployment rates of low-skilled white workers. We’ll see a slight reduction in the incomes of middle-class households and increases in the incomes of lower-income households. We’ll see also fewer people in their 20s and 30s who have never gained on-the-job experience and skills.“]
Still not sure how you feel about the minimum wage debate? Check out the video below, where Professor Boudreaux discusses raising the minimum wage and the fight for 15.