The minimum wage has been the subject of much contention recently and is likely to draw more attention in coming months, as the Democratic platform endorses the “Fight for 15” campaign and Trump has come out in support of a $10 minimum. Their motivation is simple. As Trump put it, “You need to help people. I know it’s not very Republican to say.” (Thanks, Donald, the GOP replied.) But does the minimum wage actually help people? It’s worth digging into the subject both because it is not going away anytime soon and because it offers an example of how first glances can be deceiving when it comes to economics.
The case for the minimum wage is obvious. As the cost of living rises, it seems compassionate to mandate a “living wage” for all employees. Require businesses to shell out part of their profits to add a few dollars to each minimum-wage employee’s hourly wages, and they will be better able to provide for themselves and their families. In fact, the argument goes, raising the minimum wage can even help to pay for itself because it reduces families’ need for federal assistance through food stamps or similar programs.