One of the most concepts that economists are maximum certain of is that after the cost of one thing rises, alternative than because of one thing that shifts the entire call for curve, the bundle demanded falls. Conversely, when the cost of one thing falls, the bundle demanded will increase. This isn’t arguable in economics. Additionally, it’s so cloudless that it is a part of our mutual figuring out, even for non-economists. While you listen that Macy’s is having a sale, you don’t say, “Oh, I’d better not shop at Macy’s during the sale because the prices are temporarily higher.” Refuse. You keep in mind that Macy’s is having a sale to deliver to promote extra and that how you can promote extra is to decrease their costs. Or believe what everyone knows to be true when strawberries are out of season: their worth will likely be upper than after they’re in season. In alternative phrases, a discount in provide, all else equivalent, will manage to a better worth; how you can promote the decrease quantity and feature all demanders happy is to extend the cost.
That is the outlet paragraph of my original Hoover article, “High Minimum Wage Laws Hurt Many Workers,” Defining Concepts, April 25, 2024.
In it, I talk about the consequences, a few of that have came about already, of the April 1 build up within the minimal salary for fast-food employees in California to $20 an day. Then quoting a information essayist named Jack Birle suggesting that the upper minimal salary will produce it more difficult for varsity cafeterias to compete for hard work, I scribble:
Give Birle a minute credit score. As least he understood that faculty districts are competing with fast-food employers. However later he forgot to observe via on what the minimal salary build up is doing to activity alternatives within the fast-food business: it’s decreasing them. So the minimal salary build up will produce it more uncomplicated, no longer more difficult, for varsity districts to seek out staff. There will likely be a reshuffling of employees. Upper-productivity employees will to find it extra horny to paintings within the fast-food business. They are going to displace some less-productive employees who aren’t generating enough quantity to produce it profitable for fast-food employers to rent them. However the total web impact will likely be fewer jobs within the fast-food business and, due to this fact, extra employees on the lookout for paintings in alternative industries.
I excerpted other portions of my article on my Substack. However if you wish to learn the entire thing, which is best about 1,800 phrases, move right here.
