Here are some illustrations of the principle of minimum wage: • People who beg in the street sometimes receive donations of small change. These small payments won't help them much. Suppose they are prohibited from accepting donations less than US$10, will they will be better off? • Suppose coffee shops sell cups of coffee for an average price of $2. There are so many coffee shops competing for business that they can barely cover their expenses. Coffee shops sometimes become insolvent and close. The Coalition of Coffee Vendors proposes a law to support this important and beloved industry. From now on, the minimum legal price of a cup of coffee will be $5. Most coffee shops will be hurt, isn't that obvious? But some will do well — those which sold premium coffee in luxurious shops which were already charging close to or more than $5. (You won't be surprised to learn that these shops have a lot of influence with the Coalition of Coffee Vendors.) The law causes more harm than good. Therefore it is a bad law, aside from the fact that dictating how coffee shops and customers interact is nosy, paternalistic, and coercive. The chief practical negative of minimum wage is increased unemployment among the most vulnerable workers, who would most benefit from greater access to employment. This is a realistic concern (emphasis added).It is no more coercive than myriad other taxes
Agreed. And surely we can agree that all taxes have the negative effect of depriving the taxpayers of some funds. To decide if the tax, or a law, is good or not, we have to do a cost-benefit analysis. The fact that coercion must be used to collect taxes or enforce laws is a negative, but one that people might decide is worthwhile given the benefits. The number of unemployed youth in July 2013 was 3.8 million, compared with 4.0 million
a year ago. The youth unemployment rate was 16.3 percent in July 2013. Among the major
demographic groups, unemployment rates were lower than a year earlier in July for young
women (14.8 percent) and whites (13.9 percent), while jobless rates changed little for
young men (17.6 percent), blacks (28.2 percent), Asians (15.0 percent), and Hispanics
(18.1 percent).