In the August 1 WSJ, David Henderson summarizes the consensus among economists, as well as the demagoguery among politicians and pundits, concerning the minimum wage (which the GOP is offering to the Dems in exchange for death tax relief).

Two things are happening simultaneously: (1) the evidence that the minimum wage harms more than it helps is increasing; and (2) the support among politicians for increasing the minimum wage is also increasing. What explains this breakdown in rationalism?

As usual, the media aren’t helping to enlighten the public, prefering instead simply exploit its audience’s lack of training in economics to reinforce attitudes. An August 2 ABC News report on the minimum wage began by citing how much inflation has increased in comparison to the minimum wage, demonstrating the obvious: low-paid, unskilled workers don’t get paid enough to get by.

But to use this unfortunate fact as an argument to mandate higher wages requires one to believe two falsehoods: (1) employers have some control on the price of labor, and (2) employers will compensate their employees whatever pay and benefits the government (and not the market) mandates, without adjusting the size of their force.

The fact is that employers, workers, and the government are all powerless in setting the price of labor. Low-paid, low-skilled are in excess supply, both domestically (thanks to illegal immigration and our failed education system) and abroad. When the government (or labor unions) set the cost of labor higher than its market value (price), then the market adjusts by replacing workers with machines, moving operations elsewhere, expanding the black market (illegals), and expanding the grey market (barter and exchange as in Third World economies).

So if you want to see more mom-and-pop businesses replaced by big-box conglomerates, more manufacturing to move overseas, more corner cafes replaced by fast-food outlets, more youth unemployment, more illegal immigration, less health care and training benefits for entry-level workers, less pressure on schools to improve their product, and continued degradation of our economy toward Third World status, please write your legislators and urge them to increase the minimum wage. And while you’re at it, ask them mandate free health care too.