116
Economics in One Lesson
larger the number of workers it attempts to cover, and the more it
attempts to raise their wages, the more likely are its harmful effects to
exceed its good effects.
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 compara-
ble compensation.
The only exception to this occurs when a group of workers is
receiving a wage actually below its market worth. This is likely to hap-
pen only in special circumstances or
localities where competitive
forces do not operate freely or adequately; but nearly all these special
cases could be remedied just as effectively, more flexibly, and with far
less potential harm, by unionization.
It may be thought that if the law forces the payment of a higher
wage in a given industry, that industry can
then charge higher prices
for its product, so that the burden of paying the higher wage is merely
shifted to consumers. Such shifts, however, are not easily made, nor
are the consequences of artificial wage raising so easily escaped. A
higher price for the product may not be possible: it may merely drive
consumers to some substitute. Or, if consumers continue to buy the
product of the industry in which wages have been raised, the higher
price will cause them to buy less of it. While some workers in the
industry will be
benefited from the higher wage, therefore, others will
be thrown out of employment altogether. On the other hand, if the
price of the product is not raised, marginal producers in the industry
will be driven out of business; so that reduced production and conse-
quent unemployment will merely be brought about in another way.
When such consequences are pointed out, there is a group of peo-
ple who reply: “Very well; if it is true that the X industry cannot exist
EconOne_Prf2_Q5_to_client.qxd 3/3/2008 8:42 AM Page 116
Minimum Wage Laws
117
except by paying starvation wages, then it will be just as well if the min-
imum wage puts it out of existence altogether.” But this brave pro-
nouncement overlooks the realities. It overlooks, first of all, that con-
sumers 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 alterna-
tives 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 pre-
viously employed in that industry will be forced to turn to alternative
courses that seemed less attractive to them in the first place. Their
competition for jobs will drive down the pay offered even in these
alternative occupations. There is no escape from the conclusion that
the minimum wage will increase unemployment.
2
A
nice problem, moreover, will be raised by the relief program
designed to take care of the unemployment caused by the minimum
wage law. By a minimum wage of, say, 75 cents an hour, we have for-
bidden anyone to work forty hours in a week for less than $30. Sup-
pose, now, we offer only $18 a week on relief. This means that we have
forbidden a man to be usefully employed at, say $25 a week, in order
that we may support him at $18 a week in idleness. We have deprived
society of the value of his services. We
have deprived the man of the
independence and self-respect that come from self-support, even at a
low level, and from performing wanted work, at the same time as we
have lowered what the man could have received by his own efforts.
These consequences follow as long as the relief payment is a
penny less than $30. Yet the higher we make the relief payment, the
worse we make the situation in other respects. If we offer $30 for
relief, then we offer many men just as much for not working as for
working. Moreover, whatever the sum we offer for relief, we create a
situation in which everyone
is working only for the
Do'stlaringiz bilan baham: 
