Yet Another Reason Why Minimum Wage Studies Might “Fail”

Source: Independent Institute
by Caleb S Fuller

“Last year, I wrote about why empirical minimum wage studies might fail to find a disemploying effect. In this post, I want to explore yet another reason why it might seem like raising the minimum wage is a free lunch. The reason concerns economics going ‘beyond p’s and q’s’ — a theme I’m fond of promoting on Marginalia. Here’s my idea in a nutshell. In 2023, there are more available ‘margins of adjustment’ as compared with 1938 (the year of the Fair Labor Standards Act). With more margins of adjustment available, employers can adjust to minimum wage hikes by removing those perks from the total compensation package while leaving employment untouched.” (09/12/23)