There is a strange argument that is often put forth when discussing minimum wage, namely that eliminating the minimum wage would result in falling wages. Allusions to slavery are often made. Allow me to quote the ever-hilarious Robert Reich:
Now….there is a certain diabolical logic to [eliminating minimum wage]. Maybe, if we were willing to all work for a nickel or a penny, perhaps we would all have jobs. In fact, slavery was a full employment system.
Do you see the absurdity…To assume that the goal is just to get jobs by keeping wages down completely puts logic on its head.
(By the way, this video is certainly another case for a Reich v. Reich post since here he admits higher wages cost jobs but in his minimum wage video of the other day, he staunchly denies such reality).
Reich (and others) seem to think that wages are kept high only because of minimum wage. Interestingly enough, there is no evidence to suggest this is true. According to the BLS, just 3.9% of hourly workers earn minimum wage or less. That’s about 2.6% of the total employed labor force. Not a big number. In order for Reich’s assertion to be correct, those working at or near minimum wage would have to be much closer to 100%. Workers are paid according to the value they add to the firm. If minimum wage were eliminated, it is not likely many, if anyone, would face pay cuts. However, those who aren’t allowed to join the labor force now because they are priced out would have an easier time finding jobs.