Min. Wage creates Poverty

In this new, excellent study from the Fraser Institute, Robert Murphy, Charles Lammam, and Hugh MacIntyre explore the employment consequences of minimum wages, especially as these play out in Canada.  Here’s a slice from the Executive Summary:

There is an enormous body of empirical research examining the e ects of the minimum wage. Canadian studies are considered of higher quality than US studies because (among other reasons) there is a wider variability in the provincial Canadian minimum-wage variable. Canadian literature generally finds that a 10% increase in the minimum wage reduces employment among teens and young adults (ages 15 to 24) by 3% to 6%. By making it harder for low-skilled workers to obtain an entry-level position, the minimum wage may perversely hinder the development of human capital and harm the long-term career prospects of the very people it ostensibly helps. Indeed, Canadian researchers have found that hiking the minimum wage has no statistically significant impact on poverty and in some cases can increase it.

Here’s a very brief video that accompanies this study.

And this cartoon perfectly captures the essence of the minimum wage and the chief fallacy that surrounds it.

The minimum wage is indeed a cartoonish policy that appeals to economically immature minds (and to those who greedily prey upon the economically immature).


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