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News Link • Employee and Employer Relations

How to Get Progressive Students to Understand the Minimum Wage

• by Emily Skarbek

One of my favorite ways to teach this is when we cover the minimum wage. Using Thomas Leonard's article Eugenics and Economics in the Progressive Era, I explain how both proponents and opponents of the minimum wage agreed on the effects - that binding price controls would cause job losses and unemployment. There was no disagreement on the fundamental economic analysis. The difference of opinion between advocates and opponents of minimum wages was their normative assessment as to whether the resulting unemployment was socially beneficial (and normatively desirable) or socially costly (and undesirable).

The advocates for minimum wages - like Sydney and Beatrice Webb - argued that minimum wages were a good policy precisely because they identified the "unfit" and would disemploy members of that group. Alfred Marshall, Pigou, John Bates Clark and other neoclassical economists argued that minimum wages were a bad policy precisely because they cause unemployment and job loss.

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