Does minimum wage legislation help or hurt workers?
Politicians love the minimum wage. It is a perfect issue on which to demagogue, since it promises benefits to the public while requiring no tax dollars to be spent, because the costs fall entirely on private businesses. And its costs on workers are hidden—there is no organized political pressure group of people who would have occupied jobs that the minimum wage kept from coming into being. It is especially harmful to workers possessing few or no skills. “Minimum wage laws restrict the employment of low-skill workers when the wage rate exceeds the worker’s marginal productivity,” notes George Mason University economist Thomas Rustici. “By doing so, the law prevents workers with the least skills from acquiring the marketable skills necessary for increasing their future productivity, that is, it keeps them from receiving on-the-job training.” It also makes it more difficult for workers to enter the job market for the first time.
