Mother Jones Proves To Us, Once And For All, That The Minimum Wage Destroys Jobs

This isn’t, of course, what Mother Jones thinks it is saying when it tries to defend a higher minimum wage in the US. But, much to my amusement, it is in fact what it does say. That the minimum wage reduces the number of jobs where a minimum wage is imposed. This is of course obvious from the basic economics of the matter: raise the price of something and people will buy less of it.It is possible to construct theoretical models where this is not so, some involving Giffen Goods but we’re pretty sure there aren’t any of those in the US economy. Other theoretical models call into play monoposony, which is where we’ve got the buyer of the good having significant market power. This idea fails too given that the minimum wage really bites in the food industry for the US (it being about 50% of those who get that minimum) and an industry with tens of thousands of independent employers simply isn’t going to have monopsony power over the price of labour. It is in fact much more like that model of perfect competition that Econ 101 teaches us and Econ 102 teaches us so rarely exists in real life.
Here’s Don Boudreaux having a go at Mother Jones:

No serious opponent of minimum wages has ever said that they are “harbingers of economic doom” and sparks of “economic collapse.” Not Milton Friedman. Not F.A. Hayek. Not Thomas Sowell. Not my colleague Walter Williams. No credible scholar or pundit has ever made such a prediction about minimum wages at the relatively low levels that these wages are set in the United States. The reason is that only a small percentage of the workforce earns wages at, or just above, the prevailing legislated minimum. Therefore, minimum-wage hikes of the sort that are typical in the U.S. cannot possibly propel the economy to the brink of “collapse” or unleash economic “doom.”

http://www.forbes.com/sites/timworstall/2015/04/19/mother-jones-proves-to-us-once-and-for-all-that-the-minimum-wage-destroys-jobs/