Economics in One Lesson XIII: Government Price Fixing

Posted: June 3, 2012 by ShortTimer in Economic freedom, Economics, Welfare state
Tags: ,

From “On the Other Hand” by the western Canadian Frontier Centre for Public Policy:

Price-fixing doesn’t work, and they make the important point that wages are also a price – they are the price an individual chooses to sell their labor at.  When the government sets a minimum price for labor, it means that someone who’s labor is not worth paying the minimum wage for, like young people, disadvantaged folks with limited skills, etc., can’t even get entry-level jobs that would then let them boost their potential wages through acquiring experience.  They can’t add value to their labor, because no one wants to buy their labor at the price the government sets.

Minimum wage laws by themselves don’t work, something we noted waaay back on the old site, with the Job-Killing Impact of Minimum Wage Laws.

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