How Minimum Wage Laws Discriminate Against Low-Skill Workers

Sometimes, the best intentions have the worst consequences.

We have to be honest with ourselves here. Is a minimum wage actually helping poor people to earn a better living? Honestly, the answer is no.

Walter Williams, a professor of economics at George Mason University, explains in the attached clip why the minimum wage actually goes against the interests of the poor.

If you put yourself in the place of an employer, and you have to pay $7.25 an hour no matter whom you hire, well then, would you hire a worker who is so unfortunate so as to have skills that would only enable him to produce three or four dollars worth of value per hour? ...

Most employers will look at that as a losing economic proposition; that is, to pay somebody $7.25 when that somebody could only produce $4 worth of value per hour. And so the effect of the minimum wage law is to discriminate against the employment of low-skilled people ... they're not going to get a job in the first place. That is, the lowest skilled people, the employer just will not hire them.

Now in the absence of a minimum wage law, if (the employers) could pay them three or four dollars an hour, $5 an hour, well they could be employed and they would learn something on the job that gets on-the-job training, and ultimately be worth $7.25 or even more than that. So what the minimum wage law does, it cuts off the bottom rungs of the economic ladder.

Brilliant yet simple. If we truly want to alleviate poverty in our country, we must understand what works and what does not. When I talk with other people on this topic, I bring it up to help them realize some important truths!

Do people you know grasp this concept?

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