Pennsylvania & The Folly Of Minimum Wage Laws

Pennsylvania Governor Tom Wolf has proposed raising the legal minimum wage to $12 per hour on July 1, 2019, and then an additional 50 cents per year until the minimum wage reaches $15 per hour in 2025.

Laws mandating a minimum wage have existed without interruption since the federal Fair Labor Standards Act of 1938. So habituated have we become to this form of government intervention that when a politician like Gov. Wolf proposes to mandate a higher minimum wage, few people bother to question whether government is competent to rule on what a proper wage is.

Neither government officials nor committees of experts that they assemble can possibly process as much information as free markets provide through the forces of supply and demand to determine what wages should be. This is one of the fundamental errors of socialism (take note, Bernie and Alexandria) - namely, the presumption that government planners have enough wisdom to overrule markets and set prices. Alas, the woeful result of such hubris is that by supplanting the pricing mechanism that brings supply into balance with demand and thus coordinates economic activity, economic production becomes uncoordinated, irrational, and chaotic, leading to impoverishment (see Venezuela).

Advocates of minimum wages might retort that there are normative issues here that take precedence - that it isn’t “just” or “fair” that an employer pay an employee (even one who is eager to work at a low wage) less than their arbitrarily chosen minimum. Those who clamor for higher minimum wages are completely free to pay higher wages to anybody they choose to employ. But what gives them the right to tell somebody else how much they must pay for something?

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