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Home > Classic Rock for Classical Liberals, economics, music, philosophy, politics, regulation > It’s Guaranteed, I’m Making Minimum Wage!

It’s Guaranteed, I’m Making Minimum Wage!

Fenix_TXAs the minimum wage debate continues to rage, Arnold Kling wants to hear the following point shouted from the rooftops:

[T]he minimum wage in the United States is just barely effective. We teach in freshman economics that a price floor is only binding if it is above the equilibrium price. But looking at the number of workers covered by the minimum wage is small, and knowing that the vast majority of unemployed workers are not clamoring for minimum-wage jobs, I would say that you should draw your labor supply and demand diagram with the minimum wage just epsilon above the market equilibrium. It should be hard to see the effect of the minimum wage on employment in your diagram, and it should be hard to see the effect in the real world.

In that sense, Elizabeth Warren is right–if you really want to have an effective minimum wage, it needs to be a lot higher. That is what the debate should focus on, in my opinion. What would happen if we raised the minimum wage by $5 an hour or more? In that case, if somebody wants to try to argue that the effect on employment would be negligible, good luck to them.

Even punk rockers Fenix TX weigh in on perverse incentives offered by the minimum wage with a song appropriately titled “Minimum Wage”, from their 1999 self-titled sophomore release:

Politically correct and mentally erect
I’m doing everything I can to conserve the best
But life ain’t nothin but a bowl a grits
And this United States proud crap makes me sick
People tell me go make a name for yourself
Cause that’s the only way you’re gonna get outta this hell
I’m gonna try and try and try and do all that I can
But I’ll never understand

It’s guaranteed!
I’m making minimum wage
I can’t survive this day and age
Home of the free, land of the brave
I can’t survive this day and age
It’s guaranteed, I’m making minimum wage

I’ll take a work strike over a tax hike
Any day of the year
And I don’t care about anything
As long as those striking ain’t bottling beer
Give me a gun let’s go get the XXX
He wouldn’t mind he’s protected by the aliens
I’ve got a green man in my backyard
This time the government has gone too far

Image via Fenix TX

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