The usual case against the minimum wage has three components:
- Minimum wages reduce employment among unskilled workers.
- Therefore minimum wages are bad for unskilled workers.
- Therefore minimum wages are bad policy.
The problems with this case are that
- Minimum wages might not reduce employment very much.
- Even if they do, that doesn’t make them bad for unskilled workers.
- Therefore we cannot conclude (via this route) that minimum wages are bad policy.
Minimum wages are bad policy, though — but for entirely different reasons.
I’ll get to those reasons shortly, but first let’s examine the traditional argument a little more closely. I’ll number my paragraphs to make it easier for commenters to respond.