The Obvious Math of Minimum Wage


Tom Knighton catches the Boston Globe slipping in an admission that raising the minimum wage costs people their jobs.  In an editorial about a government-subsidized summer jobs program for teens, the editorialists write (emphasis Knighton’s):

The program provides money for YouthWorks, which pays the wages of 4,400 low-income teens in eligible cities who work for nonprofits or local government agencies in the summer. The Senate originally proposed the same funding amount as last year, $11.5 million. Level-funding actually means 600 fewer positions, though, because of the rise in the state’s minimum-wage increase to $10 per hour this year and $11 per hour next year.

The Left’s claims against this obvious reality require one of one of two dubious propositions. The first would be that businesses with minimum-wage employees have some sort of slack that they can pull out of their system.  Either they must (A) have money hidden away or wasted or (B) their prices are artificially low enough that they could raise them without losing customers or clients to competing businesses or products.  The second dubious proposition would be that the increased pay for low-end workers would give them more money to spend, which would increase the need for low-end workers.

Per their usual habits, progressives tend to wave their hands around these possibilities like magicians and assume everything will work out for the best (because, as I suggested this morning, their goals are self enrichment or self valuation), but the details are critical.  One would have to argue that driving up wages in a particular market with a particular mix of industries would not lose low-end jobs to shifts in demand or to automation.

The fact that the most basic calculation, as acknowledged by the Globe, is so clearly on the side of job losses only emphasizes that we shouldn’t let advocates just assume a higher minimum wage doesn’t kill jobs.  As the truism states, the real minimum wage is always zero.