The Minimum Wage vs. Reality

Why is the left obsessed with raising the minimum wage? In almost every significant venue, from Obama’s state of the union speech to Paul Krugman’s New York Times column, leftists passionately advocate its increase. The latest examples are the Senate Democrats’ effort to raise the minimum wage to $10.10, Maryland governor O’Malley’s raising it in his state, and just the other day the city of Seattle’s raising it to $15 — the highest in the country. Surely those on the left understand the harm any minimum wage (and especially a high one) does to the very people they claim to want to help?

In fact, we know they understand this.

For example, Christina Romer, the left-leaning former chairwoman of President Obama’s Council of Economic Advisers, recognizes how the minimum wage causes unemployment. And Paul Krugman explicitly describes the destructive effects of the minimum wage in his economic textbook.

The economic case against the minimum wage is easy to grasp. When the government artificially raises the price of something, the demand for it goes down. Raising the minimum wage decreases the demand for unskilled labor (usually the young). It raises the unemployment among this group and accelerates the adoption of technology replacing even more low-skilled workers. (For an excellent, but not exhaustive, economic analysis, see John Cochrane’s writings here.)

So why, then, does Paul Krugman advocate the minimum wage in the pages of the New York Times? Why do so many of his colleagues on the left overlook the economic harm to those they allegedly want to help?

The answer is simple: they don’t care about economic harm.

They don’t care about the teenager who will lose his job and the opportunity to gain new skills, and they don’t care about the immigrant trying to feed his family. The left supports the minimum wage, but not because it allegedly has some favorable impact on anyone. They know it has no favorable impact, but they don’t care. The left supports the minimum wage because they can sell it as “good” and “noble” by lying and evading its economic consequences.

Most people care about doing what they think is right. Most of us have, unfortunately, been thoroughly marinated in the ethics of altruism; we have been taught that unselfishly sacrificing ourselves for others, especially the “poor and needy,” is the very essence of morality. That caring about the “poor” above all is a requirement of being a good person. We have been taught not to oppose any plan aimed at helping the poor — not to question it, not to think too deeply about it. That would be too selfish and uncaring. The left capitalizes on our altruistic morality, on our unwillingness to question their motivation to sell us a program that makes them look like good guys — makes them look moral.

Note that Obama doesn’t say that “America deserves a raise” because low-wage workers have suddenly become more productive and, therefore, more valuable to their employers. No, he says that they deserve it because “nobody who works full time should have to live in poverty.” What about the consequences of the minimum wage? Consequences be damned! What about the businessman who must make ends meet and can only pay a wage for unskilled labor that is lower than the minimum wage? Businessmen be damned! What about the workers who are willing to work for lower than minimum wage, but will be laid off or replaced by automated teller machines and other automatic processes? Workers be damned! The minimum wage is right! It makes us feel moral! Reality be damned!

Raising the minimum wage feels good because it appeals to the prevailing altruism in the culture. And anyone who accepts altruism and really wants to practice it will ultimately choose that morality over economic consequences, and, as we can see from the rise of collectivism in the 20th century, over reality itself. So what if some people have to sacrifice their jobs? Sacrifice is the essence of altruism. So what if you have to lie about the economics? Altruism requires us to ignore the way the world really works, so a “noble lie” every now and then is not only necessary, it is good.

Many people understand that the minimum wage defies economic reality. What we need are more people to understand that the morality of altruism defies reality. Human life and happiness require freedom, including the freedom to compete on the labor market with lower wages — yet this is the very reality the altruists want us to ignore in the name of the “poor.” That’s why it’s impractical — and any policy based on it will be destructive.

To move toward freedom — to defeat the senseless and immoral absurdity that the minimum wage represents — it is altruism that must be defeated.