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[2254] Of Walter Williams on minimum wage

Suppose a fence can be produced by using either one high skilled worker or by using three low skilled workers. If the wage of high skilled workers is $38 per day, and that of a low skilled worker is $13 per day, the firm employs the high skilled worker because costs would be less and profts higher ($38 versus $39). The high skilled worker would soon recognize that one of the ways to increase his wealth would be to advocate a minimum wage of, say, $20 per day in the fencing industry… After the enactment of the minimum wage laws, the high skilled worker can now demand any wage up to $60 per day … and retain employment. Prior to the enactment of the minimum wage of $20 per day, a demand of $60 per day would have cost the high skilled worker his job. Thus the effect of the minimum wage is to price the high skilled worker’s competition out of the market. [Walter Williams. The State Against Blacks. 1982]

By Hafiz Noor Shams

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