by Richard Epstein
September 03, 2013
It is idle to predict that the only effect of a “living wage” will be to increase the wages of all people earning less. The real challenge is to figure out the effects that the law has on job formation, consumer prices, educational attainment, crime rates, and a host of other issues. No serious discussion of the topic can ignore the simple economic truth that under universal conditions of scarcity, people respond to incentives in ways that benefit themselves and their families—and not some abstract social ideal. That one point should dim the mindless optimism behind new regulations, and hopefully encourage people to think about deregulation as a way to reduce administrative costs and improve incentives for productive behavior.