In Washington, D.C., companies that get $100,000 or more in government contracts are required to pay employees at least $11.75 per hour. In Manchester, Conn., they must pay at least $14.
If minimum-wage advocates really believe wages are set arbitrarily, why do they favor only a $7.50 or $14 minimum? Why not $100?
At those levels, even a diehard interventionist knows that workers would be hurt. But the principle is the same at lower levels. If wages are a function of productivity, not whim, then it follows that if the minimum wage is set above workers' productivity, those workers -- the intended beneficiaries of the legislation -- will be harmed.
The Law of Unintended Consequences strikes again. Well, let me correct that. For some minimum-wage advocates, the bad consequences are not quite unintended. Consider the support for the minimum wage from large companies like Wal-Mart and organized labor. Why do they want the minimum raised? Economist Alex Tabarrok of George Mason University answers, "[T]hese employers will benefit from an increase in the minimum wage because it will raise the costs of their rivals. This is why unions have typically been in favor of the minimum wage even when their own workers make much more than the minimum" ().
Where there's "humanitarian" government intervention, there are politically connected special interests reaping the benefits.
Politicians have tried to defy the market process with minimum-wage and living-wage laws for years. The consequences are never good for the people they claim to want to help. When will we learn what workers need is not meddling politicians but free and competitive markets?
Anyone who truly wants to help workers achieve higher living standards will work to remove all government barriers to peaceful, consensual economic activity.
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