mises.org / Ryan McMaken / Nov 18, 2016
Last week, a majority of voters in four states approved new mandated increases to the statewide minimum wage.
For those workers whose productivity remains above the newly mandated wages, they will likely keep their jobs and see no change. However, for teenagers, the poorly educated, and others with few skills, the new higher wage will price them out of a job.
In the short term, even some workers with productivity levels below the mandated wage may keep their jobs. For a time. In the medium to long term, however, those workers will either be replaced by automation, or employers will simply cease to hire low-productivity workers.
As we’ve covered here and here at mises.org, the only way to sustainably increase the wages of workers is to increase their productivity. If a worker’s wages are to go up, there must either be an increase in the demand for that worker’s services, or the worker must be able to produce more in less time.
This is why the industrial revolution brought with it enormous increases in workers wages and standards of living. A single workers could produce far more in the 19th century than he could produce in the 16th century. All that productivity brought with it higher real wages.
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