As a macroeconomics student, I agree with Richard Berman (“Minimum wage resistance,” Web, March 6). The basic idea behind the minimum-wage hike is good, but there are disadvantages that come with such a law.
It has been argued, for example, that a minimum-wage requirement raises the equilibrium wage, and hence, leads to increased unemployment. There are other important effects of a minimum wage law, as Mr. Berman mentions. Employees must bring at least as much value to their companies as they are paid, or those companies will fail and many jobs will be lost (or never be created at all). Raising the minimum wage raises the hurdle a worker must cross to justify being hired.
There is a skill gap today, and higher wages require workers to have more skills. Upping the minimum wage increases the likelihood of jobs being lost in small businesses, retail establishments, restaurants and fastfood chains. We can turn to the law of demand for better understanding. The higher the price, the lower the demand — and this extends to the price of labor. Businesses can’t pay workers more than the value those workers bring to the table. (Higher wages will also lead to more expensive goods.)
MIKAELA WILJE Edmond, Okla.