Capitalism and Freedom, Conservative, Free Markets, Milton Friedman

Milton Friedman on Minimum Wage Laws

According to Friedman, “There are no positive objectives achieved my minimum wages. It’s real purpose is to reduce competition with the trade unions.”

The well intentioned ‘do-gooders’ think that raising the minimum wage helps low wage earners. According to Friedman, the opposite occurs. What you do when you raise the minimum wage is to ensure that those whose skills are not up to the new rate will become unemployed.

The market, if allowed to set wages, will maximize the total number of jobs. That is due to the laws of supply and demand. It works for labor just as any other product or commodity. The number of jobsĀ  will be adjusted by the rate the market will bear. Raise the minimum wage and you will see a reduction in the lowest paid jobs.