More on How Minimum Wage Legislation Harms Even Employed Workers
25th March 2014
Don Boudreaux, a Real Economist, explains.
Remember, minimum-wage legislation strips from workers an important bargaining chip – namely, the ability to offer to work for an hourly wage below the legislated minimum. So in addition to destroying some job opportunities for low-skilled workers, minimum-wage legislation also prompts employers to offer worse non-wage employment terms to those workers who are not rendered unemployable by minimum-wage legislation. Employee morale thereby generally falls. But because minimum-wage legislation reduces low-skilled-workers’ job opportunities across the board, workers are less able to shift jobs from their current employers to other employers. (And because nearly all employers who continue to hire some low-skilled workers at the now-higher minimum wage worsen their non-wage employment terms, the relative attractiveness of shifting jobs also falls. At the very least, each employee is denied by government the opportunity to offer a different employer the option of paying him or her a below-minimum wage in return for the employer offering to that worker especially attractive non-wage benefits.)