Minimum Wage Causing Unemployment in 2 Photos

MARKETS IN EVERYTHING
Below are two photos I took last month in two different major American cities.
THE MINIMUM WAGE UNEMPLOYED
Minimum wages outlaw employment agreements for most positions not productive enough to justify the full minimum wage. Said differently, as Paul Krugman reverse describes it in his textbook “Economics” (2nd edition, page 128):
[W]hen the minimum wage is above the equilibrium wage rate, some people who are willing to work—that is, sell labor—cannot find buyers—that is, employers—willing to give them jobs.
EXAMPLE
Grocery stores, just 20 years ago, employed baggers who would bring your groceries to your car and load them in your trunk. Just 10 years ago calls into corporate headquarters were fielded by a receptionist. Anyone who’s called a major business recently knows its now almost impossible to actually get to a receptionist, but a computer recording will happily guide you to your destination in the receptionist’s place.
One aspect of price floors is they make the alternatives proportionally less expensive.
So the next time you hear someone trying to “make an example” out of McDonald’s by complaining about their wage rate, remind them that mandating a wage higher than that service is worth does not help the McDonald’s cashier. It will cause them to disappear, just like the receptionist of 10 years ago:
Join The Discussion
3 CommentsThoughts? Comments?
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Rick Kelo August 11, 2014 , 4:06 pm Vote0
I shared these photos on Twitter at the time I took them. You’re free to find all my various economic & Classic Liberal musings there anytime @1ClassicLiberal.
Mike Vroman August 11, 2014 , 7:20 pm Vote0
Thanks, Rick. I’ll share this article around a little, it is so simple and to the point that it should be much more effective than the average piece on the subject.
Rick Kelo August 12, 2014 , 7:40 am Vote0
@mikevroman65, glad you enjoyed it. The bottom line is no one beats the Law of Demand. Make anything, jobs in this case, more expensive and the quantity demanded goes down.