Minimum wage

Mark Perry points to an interesting story about the minimum wage:

The minimum wage is set to rise in North Carolina next month but the effects are already being felt at summer camps around the state. The wage hike’s strain on some already tight budgets could mean fewer counselors to look after the children.

Some camps have already cut field trips to save money. And now they must try to get by with fewer counselors.

A few points:

• This story is simple econ 101 -- when you raise the price of something, in this case workers, you get less of it. That said, I don't think the minimum wage is a massive destroyer of jobs, for the simple reason that it is not terribly high in real (inflation adjusted) terms. In addition it only applies to less than 4 percent of workers.
  

• With that in mind we shouldn't kid ourselves that it has no effect. If a fast food chain has 30 workers, 15 of which are making minimum wage and average 30 hours per week, the cost of a dollar increase in the minimum wage is $450/week, plus payroll taxes. That works out to over $23,000 plus payroll taxes. That's roughly the annual cost of two workers making $7.25/hour (the new federal minimum wage starting next month) and working 30 hours per week.
  

• The most compelling reason against the minimum wage may simply be a moral one. With the minimum wage workers can elect politicians that force business owners (who are outnumbered by employees) to give them more money. Wages are simply a price that two people negotiate for a good (in this case labor). The government generally doesn't tell businesses what they have to charge for their products, why should I be forced to charge a certain price for my labor?
  

• Indeed, while it may be tempting to dismiss this argument -- who could possibly want to be charged less for their labor -- this does become a problem if you are poor and desperately need work. If you produce only $3 worth of value to a business, say by sweeping floors, but the business is forced to give you $7 for your labor they simply won't hire you. Is this widespread? Who knows, but it would be foolish to think it never occurs.