Walter Block on the Minimum Wage
Walter Block recently spoke to the PanAm Post about those who demand a $15 per hour minimum wage and falsely believe salaries are based on employer generosity:
“This is incorrect. The correct theory of wage determination is based upon productivity of the worker,” said Block. “Why is it that a lawyer can earn $500 per hour, an accountant $200 per hour, a plumber $50 per hour, [and] a person who pushes a broom $10 per hour? Is it because of the different amounts of generosity of their employers? No, it involves productivity.”
Block claims increasing the minimum wage will lead to greater unemployment, because employers will not hire workers who are less productive than they are federally mandated to earn.
“Suppose the productivity of a worker is $10 per hour, and the minimum wage is $15 per hour. Any employer who hires him will lose money. The firm will not hire such a person. He will become unemployed. Who gains from the unemployment of relatively low skilled, low productive people? Unions who compete with them. The minimum wage is an unemployment law.”