[–] DukeofAnarchy 0 points 1 point 1 point (+1|-0) ago
"From what I understand it would be better to have a higher minimum wage, because businesses would have an incentive to automate low-productivity jobs. Then having people focus on better paying high-productivity jobs? "
You're right in thinking that minimum wage legislation leads businesses to increase automation. What you're missing is that this is done as a substitute for low-productivity labor. The minimum wage does not move low-wage workers into higher-wage jobs; it disemploys them.
"The first thing that happens, for example, when a law is passed that no one shall be paid less than $30 for a forty-hour week is that no one who is not worth $30 a week to an employer will be employed at all. You cannot make a man worth a given amount by making it illegal for anyone to offer him anything less. You merely deprive him of the right to earn the amount that his abilities and situation would permit him to earn, while you deprive the community even of the moderate services that he is capable of rendering. In brief, for a low wage you substitute unemployment. You do harm all around, with no comparable compensation."
"When such consequences are pointed out, there is a group of people who reply: “Very well; if it is true that the X industry cannot exist except by paying starvation wages, then it will be just as well if the minimum wage puts it out of existence altogether.” But this brave pronouncement overlooks the realities. It overlooks, first of all, that consumers will suffer the loss of that product. It forgets, in the second place, that it is merely condemning the people who worked in that industry to unemployment. And it ignores, finally, that bad as were the wages paid in the X industry, they were the best among all the alternatives that seemed open to the workers in that industry; otherwise the workers would have gone into another. If, therefore, the X industry is driven out of existence by a minimum wage law, then the workers previously employed in that industry will be forced to turn to alternative courses that seemed less attractive to them in the first place."
From "Economics in One Lesson" by Henry Hazlitt (A great book. Nobel Laureate F.A. Hayek said of "Economics in One Lesson": "I know of no other modern book from which the intelligent layman can learn so much about the basic truths of economics in so short a time.")
[–] Empire_of_the_mind ago
It doesn't