Raising Rival’s Costs

Catherine Rampell at Economix is somewhat surprised that some employers have signed a petition supporting today's increase in the minimum wage.  Put aside the fact that this so-called petition is coming after the law is already passed–can anyone say cheap talk–it's really not surprising that some employers support the minimum wage.  Rather than a violation of Econ 101, as Rampell suggests, it's more an implication of Econ 101.  Simply take a look at why the employers say they are supporting the law.  Uniformly the responses go like this:

Social justice, honest day's labor, inequality…. followed by:

I have always paid above minimum wage.

I’m a small business owner but don’t have any minimum wage employees, nor would I ever.

I’ve always paid my workers, even unskilled laborers, more than minimum wage …

I’m one of those businesses that supports a so-called “living wage” and refuse to pay less than $12/hour…

Note that I don't think that these employers are being dishonest in their support for "social justice" but I do think that it's easy to be in favor of the minimum wage when it doesn't cost you anything. 

Indeed, these employers will benefit from an increase in the minimum wage because it will raise the costs of their rivals.  This is why unions have typically been in favor of the minimum wage even when their own workers make much more than the minimum.

Finally, note that the opinions of employers are quite irrelevant as to the effects of the minimum wage.  


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