Few economic policies demonstrate the difference between intent and outcome more than the minimum wage. Those who push for higher minimum wages in the cause of social justice refuse to accept the outcome that the cost is often shown in the higher unemployment it causes among the lowest paid.  Often they point to a lack of consistent correlation in prior periods.

High minimum wages will not seem to have any adverse effect if the minimum wage is lower than the market wage.  Rising minimum wages during period of robust economic growth will appear to be pain free.

Enter the dramatic growth in the minimum wage in 2006, and the economic collapse of 2008 and the lines cross and the minimum wage is pushed above the market rate for entry level positions and the principle becomes clearer. Unemployment soars especially among the young and the poor.

Robert Skidelsky wrote in Keynes- A Very Short Introduction:

Keynes emphatically rejected socialism as an economic remedy for the ills of capitalism. Both classical economists and socialists, he often said, believed in the same ‘laws of economics’. But whereas the former regarded them as true and inevitable, the latter saw them as true and intolerable.

Once again politicians attempt to deliver benefits without paying the costs. Sometimes the cost is at the expense of those who are forced or mandated to incur higher costs.  It is the intent of those who push for higher wages to push the cost on to those who employ, but ultimately this is passed on to consumers.  But when costs are pushed it is often difficult to know where they will emerge.  This is the great risk with regulation and government attempts to meddle in market economics.  In this case the cost is being born most heavily by the very workers they seek to help.

The minimum wage increased over 40% in three increases in less than 18 months.  How could they have know the economy would collapse soon afterwards.  Yet they still refuse to admit that the dramatically higher minimum wage has any impact on the unemployed.

We have doubled down on the impact by extending unemployment benefits so long than in many cultural enclaves work is no longer seen as necessary to having income. This destruction of the work ethic will have even longer adverse effects than the higher minimum wage.

Deeming a social condition ‘intolerable’ does not mean it can be cured for free.

Jeff Jacoby covers this problem well in Townhall in Minimum-Wage Laws Are Costly For The Unemployed


With the best intentions in the world, lawmakers cannot raise the value of anyone’s labor to $9.80 an hour (or $7.25 an hour, or even 25 cents an hour) merely by passing a law. Making it more expensive to hire workers who are just starting out doesn’t advance beginners’ prospects; it worsens them. Decades of economic research and empirical studies confirm what common sense should tell anybody: Boost the minimum wage beyond what low-skilled workers are worth, and more low-skilled workers will be priced out of a job. That is why minimum-wage hikes are historically so devastating to those at the bottom of the economic ladder.