Minimum wage laws are inherently self-defeating and should be eliminated immediately

"Economics is not a hard science, so theories derived from this field are often not observed in practice. There is a logical divide between the theory and practice that you had acknowledged yourself." If by "hard science," you mean to say that economics is not a natural science, then, by all means, you are absolutely correct. And it is also true that the natural scientist has a much easier endeavor insofar as his subjects are easily identifiable, stable, and have fixed and definite relationships. But economics is just as sound as physics or any other natural science, and the economist's logic is just as valid as the physicist's differential equations—in fact, they are one and the same. This is also why we must approach economic matters from mainly a logical perspective (as opposed to an empirical one). "I agree - a $100 price floor is absurd, and it will certainly affect employment rates. For one, the logic of my narrative demonstrated that "moderate" increases in the minimum wage will not have any substantial effect on employment levels, which is backed up by empirical data; something we agree on. Secondly, the logical "point" of my narrative was intended to demonstrate how and why removing the price floor will not necessarily increase employment rates due to the diminishing marginal utility of labor. I wasn't implying that any wild or excessive increase in the minimum wage rate will have no effect on the employment rate." Well, first, we don't agree on this at all. Like I said before, there is torrential empirical evidence supporting my position. My only point is that empirical studies are inherently flawed because they do not hold the ceteris paribus condition, or, in other words, they are measuring multiple independent variables simultaneously (which skew the results). Next, it may be true that "moderate" rises in the minimum wage may not lead to substantial changes in the rate of unemployment, but this is precisely why minimum wage laws are inherently self-defeating. The minimum wage law is merely one form of exogenous price rigidity that only affects a certain small sect of the economy, namely the least productive. The vast majority of society is productive enough to earn wages that far surpass this arbitrary price floor, and those who are not productive enough to earn the minimum wage are simply not hired. Now, this is not always the case. The minimum wage law, if it is low enough, may not affect the employment rate at all. For example, we should not expect any changes in the employment rate if we double the minimum wage from $1/hour to $2/ hour. This is because everyone, with the exception of infants, is far more productive than $2/hour. Thus, the minimum wage law will have no affect on the employment rate if it is set below the productivity of labor, that is, if it is set below the wage rate society already earns. If the minimum wage rate, on the other hand, is set above the productivity of labor (either for the entire economy, or for a specific group), then it must necessarily elevate the unemployment rate. Simply put: if the minimum wage rate has any effect at all, it must be a negative one. "The demand for labor certainly is not totally elastic either, which is mainly due to sticky wages and a diminishing marginal utility of labor." First, the minimum wage law contributes to the stickiness of wages. Second, it is true that labor suffers from diminishing marginal returns (like all economic goods), but this does not mean that wages are in perpetual free fall. Increasing the capital stock, or increasing the productivity of capital, through technological innovation, will elevate the marginal productivity of labor and therefore real wages. This is precisely what happened in the 90s with the tech revolution. "Even so, this still neglects to mention whether the market wage rate has the sufficient purchasing power to get by with. When the market is left to determine wages, the given wages we're discussing will very likely fall below the current price floor, which has a purchasing power that is already below the federal poverty level." So we agree that the market, through competition, bids up wage rates towards the marginal product of labor. Okay, good. Your argument, then, seems to be that without this government price floor, wages would fall to unacceptably low levels. But what you're saying, then, is that the vast majority of individuals are not productive enough to earn $7.25/hour (the current minimum wage rate), or, in other words, that the price of labor exceeds its productivity. I argue that if this were true, then (a) profit-maximizing employers would have never employed them in the first place, and (b) we would have a condition of perpetual economic stagnation and high unemployment (like the social Democratic European states—that have unbelievably high natural rates of unemployment). Additionally, the government does not have the ability to elevate wages whenever it sees fit, or at all. Politicians only have the ability to say that they will elevate wages in order to get votes and stay in power. If government could truly do this, then poverty would no longer exist. Nations like India, China, and Zambia could become first-world developed nations over night with a comparable purchasing power to that of the U.S—they merely need to elevate their minimum wage! Unfortunately, wage rates are not determined by political fantasies and decree but rather by market forces and the marginal productivity of labor. I just want to conclude by saying that it is impossible to elevate real wages without first elevating the productivity of labor, the same way that it is impossible for a childless woman to be a grandmother. Additionally, individuals have two tools at their disposal when they enter the labor market: they have their productivity and ingenuity, on the one hand, and they have the wage that they are willing to work for on the other. If a relatively unproductive worker wants to compete with a highly productive worker then he or she must necessarily accept a lower price for his or her labor. Denying this individual the right to do so, with arbitrary government price floors, takes out his or her ability to compete and to find employment. The minimum wage law necessarily disarms the portion of society it is meant to aid. It is no coincidence that the urban areas in this nation have the highest rates of unemployment. And finally, it is at least conceivable that employers could deal with minimum wage laws by cutting other costs (production and allowing their capital to depreciate), but there is no reason to believe that employers, who are profit-maximizing agents, would ever willfully do this. Either way, this would lead to perpetual economic decline (permanent recession). I just want to thank con for participating in this debate. It was fun!