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February 13, 2007

That Unpossible!

Readers may recall the recent flap over the minimum wage, in which I argued that raising the minimum wage had costs and proponents of the wage argued that it didn't[correction: argued that its benefits outweighed its costs]. The plural of anecdote is not, of course, data, but the recent report in the Arizona Republic seems to at least provide some interesting countercommentary to claims the minimum wage has no effect on unemployment.

The article claims that teenage workers are being laid off in significant numbers due to Arizona recently increasing the minimum wage. This comes as no particular surprise to those of us who argued against the minimum wage: the costs of employment rise, so businesses make changes in order to compensate for those costs. And getting rid of some of your work force is an obvious method for adapting to higher costs for labor. Since the remaining workers are now being paid more, the employer has every right to demand that they work harder, which they will have to do in the absence of other workers.

Interestingly, the article points out that teenagers are being laid off in part because the companies understand the intent of the minimum wage is to help the working poor, and they are assuming that most teenagers do not need a job to the same degree the working poor do. If that's the case, then those supporting the minimum wage may still be able to claim a degree of victory in that those workers who are left are making more money and are skewed more to the working poor now. That's unlikely to be much comfort to the teenagers who have been laid off.