I teach economics. If any of my freshmen students were to submit to me a paper on the minimum wage as full of errors as the New York Times’s recent plea for a New York statewide minimum of $15 per hour, those students would receive a solid “F.” Fortunately, my students’ knowledge of economics is vastly superior to that of the Gray Lady’s editorialists.
Start with the Times’s accusation that only “stingy” legislators in Albany would vote to block Governor Cuomo’s scheme to raise New York’s minimum wage. Here’s news that the Times should see fit to print: wages are paid not by legislators, not by Governors, and not even by taxpayers. Wages are paid by employers. So while there is a great deal that is ethical about Republican legislators’ refusal to force other people — namely, employers — to pay for what Democratic legislators and the governor demand, there’s nothing “stingy” about this refusal.
If the Times’s writers truly wish to identify people who are stingy, they should look in the mirror. There they’ll find people who assert self-righteously that it is both profitable and morally necessary to employ all current low-skilled workers at hourly wages of at least $15, yet who also themselves do not undertake the effort and risks of starting restaurants, cleaning services, and other businesses that would pay such wages to these workers.
Upbraiding others for not doing what you yourself do not do is not only unseemly, it’s also stingy. In fact, there’s a good reason why the Times’s editorialists aren’t rushing out to hire all the underpaid workers that these editorialists assert exist throughout the state: there are no such workers.
The market for low-skilled workers — those paid wages at or near the minimum — is intensely competitive. On the streets of Manhattan, Albany, Buffalo, or Binghamton one will find countless employers of low-skilled workers — employers such as restaurants, hotels, delivery companies, and lawn-care services. If any of these employers fails to pay its workers wages consistent with those workers’ productivity, other employers will eagerly snatch up those underpaid workers.
These workers’ wages are bid up in the process. There’s no basis, therefore, for the belief that low-skilled workers are generally underpaid. These workers’ low wages reflect not any failure of employers to pay ‘fair’ wages but, instead, these workers’ low productivities.
Let skeptics reflect on the reality that 96% of all workers in the United States are paid wages higher than the federal minimum of $7.25 and that nearly half of the workers who earn no more than this wage are younger than 25 — that is, they are young and inexperienced. These facts are powerful evidence that employers have no ability to depress wages.
Because low-skilled workers are less productive, legislation prohibiting workers from agreeing to work at wages of less than $15 an hour assures that all workers who are incapable of producing at least this much per hour will get not “a much-needed raise” but much-dreaded pink slips.
This loss of current income is bad enough. Even worse is the loss of opportunities to gain on-the-job experience and job skills – experience and skills that, by making workers more productive, enable them to earn higher wages in the future.
The Times’s editorialists, though, don’t really care. In calling for a higher minimum wage — the costs and consequences of which will be suffered by others — these word jockeys are simply performing for readers who prefer simplistic morality tales to the more difficult, but essential, task of thinking through the full effects of minimum-wage legislation.
Mr. Boudreaux, who teaches economics at George Mason University, is the Martha and Nelson Getchell Chair at George Mason’s Mercatus Center.