Should We Have the Minimum Wage at All? A Political Economic Analysis

Minimum wage laws are touted as an instrument to improve compensation for labor, particularly for the unskilled. However, by increasing wages above market levels, they reduce the demand for labor and dampen the prospects of job seekers. Such laws create a disincentive for corporations to employ low-skilled workers, thereby limiting opportunities for human capital acquisition. Therefore, the minimum wage has the reverse effect of harming rather than uplifting workers. Because this law does not achieve its stated objective, it should be abolished to allow the market to allocate labor and resources efficiently. We do not merely oppose an increase in the minimum wage level proscribed by law, nor do we favor the status quo in this regard. Nor do we call for a decrease in the legally mandated wage. Instead, we make the case that this pernicious legislation should be eliminated root and branch.