Don Schneider

Your story is about the minimum wage… but you didn’t include the word “surplus” or the word “shortage”. This is super solid proof that your analysis of the minimum wage policy is not based on a solid understanding of basic economics.

The problem with a minimum wage is that it implies that there can never ever be a surplus of unskilled labor. Of course this is very untrue.

I like that you’re interested in reality. But if you’re truly interested in reality… then you should fundamentally oppose the minimum wage. The minimum wage seriously distorts economic reality.

China used to have a surplus of unskilled labor. How do we know this? Because unskilled labor in China used to be extremely cheap. Workers were a dime a dozen.

What about now? Labor in China is no longer cheap. Is this because China imposed a minimum wage? Nope… it’s simply because the large supply of cheap labor gave foreign business owners a big incentive to open factories in China. This naturally/organically drove up the demand for labor… which naturally/organically increased the cost/price of labor… which naturally/organically lifted millions of people out of poverty.

China used to have too many workers and too few jobs. Now, thanks to the natural/organic reallocation of businesses, the balance is far more beneficial.

We need workers and jobs to go where they are most needed. But that can only happen when wages accurately reflect economic reality.

Let’s consider a far more “neutral” example… Medium. Here on Medium there aren’t any prices. You gave your story/labor away for free and here I am doing the same. Is it a problem that stories on Medium don’t have any prices? If people shouldn’t be free to sell their labor for less than $15/hour… then should we really be free to give our labor away?

Imagine if Medium implemented the pragmatarian model. Each month we’d each pay $1 but we could choose which stories we spend our pennies on. Personally, I love stories about Adam Smith’s Invisible Hand (IH). So I’d spend my pennies on stories about the IH. The more pennies that I, and others, spent on stories about the IH… the greater the incentive that writers would have to produce stories about the IH.

What would happen if we arbitrarily changed the amount of pennies that were spent on stories about the IH? Economic reality would be distorted and this would logically and detrimentally distort people’s behavior. People would read either too few or too many stories about the IH and writers would either produce too few or too many stories about the IH.

Arbitrary prices/wages are a lie. So you should super oppose them if you’re truly interested in the truth.

  1. Why are so many people struggling?

A. Because wages are too low

B. Because economic reality is distorted

The correct answer is “B”.

If there’s truly a surplus of unskilled labor in Seattle… then we really don’t want to pretend that there isn’t. We really don’t want to encourage unskilled workers to move to Seattle. We really don’t want to encourage high school kids in Seattle to drop out. We really don’t want to discourage businesses from moving to, or starting in, Seattle.

In all cases… people’s decisions should reflect economic reality. If there’s a surplus of unskilled labor… then people should behave accordingly. If there’s a shortage of unskilled labor… then people should behavior accordingly.