How Minimum Wage Laws Are Like Poll Taxes

Here’s a letter to Mr. Eddie Ng:

Mr. Ng:

Thanks for your e-mail.

You find my colleague Dick Wagner’s case against the minimum wage “weak.” Without offering a reason for your objection to his argument, you ask why you should “believe that the minimum wage causes unemployment.”

I urge you to explore the vast empirical literature on the actual consequences of minimum wages. You’ll find there a great deal of evidence that minimum wages reduce the employment prospects of low-skilled workers. This evidence isn’t unanimous, but it is very hefty – in my view overwhelming. (Note, by the way, that job destruction is only one consequence of minimum wages. Other ill consequences include reduced fringe benefits, reduced hours, and worsened work condition.)

But even apart from the evidence, let me offer you one reason to be suspicious of minimum wages: they are akin to a poll tax.

Those who impose a poll tax demand that persons wishing to vote bring to polling places a minimum amount of value, in the form of money, before being allowed to vote. Likewise, those who impose a minimum wage demand that persons wishing to work bring to job sites a minimum amount of value, in the form of hourly productivity, before being allowed to work.

Just as a poll tax prevents people with very few dollars from voting, a minimum wage prevents people with very few skills from working. And so just as a poll tax reserves access to ballot boxes to people with more money, a minimum wage reserves access to jobs to people with more skills.

Only if you can find your way to suppose that poll taxes have no negative consequences on voting should you continue to suppose that minimum wages have no negative consequences on employment.

This article is republished with permission from Cafe Hayek.