Fairy Tale Minimum Wage Economics

Ballot backers don't think jobs will be lost

According to MIRS News, the backers of the ballot proposal that would increase the minimum wage to $10.10 per hour, "said the change would raise wages for about 940,000 people in Michigan, or 24 percent of workers."

That number is reached by looking at the number of workers currently making less than $10.10 per hour, adding in hundreds of thousands of other employees, assuming they will also get a raise and pretending that mandating a 36 percent increase in labor costs would have no effect on employment.

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If that's the kind of economics minimum wage backers believe in, they are cruel to ask for only $10.10 per hour. Raising the minimum wage to $20 per hour would "affect" even more employees; $100 per hour would "raise wages" for virtually all Michigan workers.

The reason those amounts aren't called for is that it is well understood that there would be mass unemployment, skyrocketing prices and tremendous economic harm. Though not as bad, there are negative economic effects when the government institutes wage mandates at lower levels, like the $10.10 per hour, as well.

Specifically, this harms younger and lower-skilled workers. As economist Thomas Sowell has noted, before a federal minimum wage, the labor force participation for African-Americans was equal to whites. In the 1930s, just before the federal government set a minimum wage for the first time, African-Americans actually had a lower unemployment rate than whites. Today, the rate is twice as high, and even worse for young people.

Every worker starts at a job somewhere, hoping to gain skills and experience to work their way up. The state should not make it harder for workers to get that start.


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