The Zero Effect

The idea of hiking the legal minimum wage just doesn’t go away, alas.

The usual thought experiment those with common sense use to elicit a modicum of sagacity in the minimum wage advocates’ addled synapses runs like this: You say you want a higher minimum wage, say $9 per hour. Why not $49 — or $490.00?

Every sensible person knows that wouldn’t work; you can’t simply force all wages up without dire consequences in lost jobs, businesses. But it’s a way to impart some sense of why prices are what they are, how supply and demand work.

But there’s another tactic: Make the counter-​offer. “I want to help low-​skilled workers find jobs. Set the minimum wage to $0!” Then ask:

Would people work for zero dollars?

Would all wages fall to nothing?

You’ll get a few absurd answers, but the logic should sink in, eventually: High-​wage jobs are there not due to Santa Claus employers, but because of worker productivity.

With no minimum wage, there would be more low-​wage jobs available, sure. And some of the jobs at the current minimum may indeed go down in pay, but there would be a lot more employment.

And no 5¢ an hour jobs for the same reason no one but interns today work for zero dollars. It wouldn’t be worth it, wouldn’t even cover the costs of getting to work. Folks do have other options: Keep looking; sponge off relatives; beg, borrow, steal; scrounge. Sell things on eBay.

That’s why now people reject some jobs.

Let others protest low wages. The rest of us should protest low productivity.

And a lack of common sense.

This is Common Sense. I’m Paul Jacob.