Originally Posted by Clifton
How is minimum wage an economic fallacy, or how did my world view change?
Employers do not pay employees more money than the employees are actually earning for the company. If an employee only adds $5 worth of value, and the minimum wage is $7, the employer will look for ways around hiring un-skilled or young workers. They will cut jobs if they don't add value greater than the minimum wage. They'll fire people who aren't worth the cost.
The effect of this is that more and more teenagers and unskilled workers can't find jobs. In a free market, they would trade off their lack of experience for a lower wage, in hopes of gaining experience/skill and later have the ability to demand a higher wage. But now, it's harder to find that first job to really get your foot in the door.
I understand the intended effect of minimum wage, and I used to be a supporter of it. But it's an economic fallacy. It assumes that employers COULD pay low-skilled workers more, but they just don't because they're evil and greedy. So the government comes along, passes a law, and puts the monopoly man in his place. But the fact is, they pay them little because they just don't add that much value to the company. Raising the minimum wage hurts low skilled employees, it does not help them.
And my world view changed because of things like that^. I mean, I had been told pretty much the exact opposite all my life.. being that everyone I know is a Democrat, and that's the general line you're taught in school. It was shocking to learn the ins and outs of free markets.. pretty much the opposite of what I expected to hear.