It is said that we don’t need a minimum wage, that a minimum wage causes unemployment, that if the minimum wage were lower – or completely eliminated – then employers could afford to hire more workers. It is said often that this is “supply and demand” and an ironclad “law of economics.” It is of course an argument designed to appeal to the simpler minded half of the gene pool.
Yet two facts confront us.
One, the real purchasing power in constant dollar terms of the minimum wage has declined for 45 years, so there has been a de facto “lowering” of the minimum wage, and Two, we currently have a very persistent and high level of unemployment.
The laboratory of life has proved this favorite Chamber of Commerce meme to be a fabrication that is nowhere near real life economics.
We conclude that the theory that lowering the minimum wage increases employment is FALSE.
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