Why supply and demand don’t apply to minimum wage
Re: “Minimum wage and the laws of supply and demand,” July 9 letter to the editor.
Letter-writer Mike Conkey greatly oversimplifies when he talks about minimum wage and the law of supply and demand. Labor is not a commodity like porkbellies. Perhaps the only economic principle on which Adam Smith (“The Wealth of Nations”) and Karl Marx (“Das Kapital”) agree is that labor is the source of all wealth and the proper measure of value for all other commodities. In other words, unlike porkbellies, there is no substitute for labor.
Even Conkey admits that, if minimum wage goes up, the employer still needs to get the same amount of labor, which he supposes that the employer will obtain by working employees harder. But if the employer could do that, why wouldn’t he or she do the same at the lower minimum wage, thereby accruing even more profit?
I don’t know much about the Seattle study, but I do know that there is no statistically significant correlation between federal minimum wage and unemployment rate or job growth rate between 1950 and 2014 in the United States. Gary Waldman, Aurora