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The unintended consequences of the minimum wage

September 7, 2011

Art Carden writes about the minimum wage and “the forgotten man”:

Popular treatments of the minimum wage point to Wanda Washerwoman and declare the policy a success because she now earns higher wages than she used to. If we focus solely on Wanda and ignore how the policy affects Helen Housekeeper and David Dishwasher, we aren’t telling the complete story and will likely enact policies that oppress the poor.

In other words, the minimum wage can help some people, but at the same time, it can hurt others. Those who are hurt by it are usually forgotten by the supporters of the minimum wage laws. This is a good example of the importance of looking on both seen and unseen effects.

Carden also makes interesting point when he says that “the workers who now earn higher wages might be worse off, too”. He explains:

First, higher wages can be made up for on other margins because there is a lot more to a labor contract than wages. Wanda has higher wages, but she might end up working in a less attractive environment (no AC, perhaps, or less-than-diligent floor workplace maintenance, or less safety equipment, or fewer bathroom breaks, or…) and her schedule is less flexible. Perhaps she has to put up with more sexual harassment (overt or covert). If she doesn’t like this, there might three other people who applied for her job who are willing to put up with it.

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