from Mark Perry at Carpe Diem, Why are market-based wages superior to government-mandated minimum wages? There are many reasons, here are three:
well, here is one of the three….
b. Government Wages Ignore Economic Realities and Instead Reflect Politics. I am not aware of any case of a new city minimum wage law being enacted (for example, $15 per hour in Seattle, San Francisco or LA), or a case of the federal minimum wage being increased, when the new government-mandated wage was determined based on any economic, scientific, or logical basis, or when some rigorous cost-benefit analysis was used to conclude that a $10.10 per hour or $15 per hour minimum wages generates the most benefits with the least costs. In almost every case, a minimum wage by government fiat is determined arbitrarily using the PFA method: “plucked from the air.”
For example, why a $10.10 per hour minimum wage as proposed by the Democrats and Obama with the Fair Minimum Wage Act? Well, according to Obama, one reason for a $10.10 an hour minimum wage is because he tells us that “ten-ten” is easy to remember (and that’s even in the name of bill – H.R. 1010). No economic or cost-benefit analysis, no economic logic, no economic reasoning, no empirical evidence; in other words, no systematic process of analysis that tells us that $10.10 per hour is somehow optimal or ideal, and is superior in some convincing way to a $9.10 or $11.10 per hour government-mandated minimum wage.
Why a $15 per hour minimum wage as advocated by former labor secretary Robert Reich in this video, and the new minimum wage that was recently adopted in West Coast cities like Seattle, San Francisco and Los Angeles? Again, there’s no economic analysis, economic logic or economic reasoning that supports $15 per hour, as the optimal or ideal wage for those cities, it’s another number that was apparently arbitrarily chosen politically using the PFA method, probably again because it’s another nice, round number that’s “easy to remember.”