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.

The Denver Post - - PERSPECTIVE -

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

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