The Counterintuitive Workings of the Minimum Wage

The Biden administration and House and Senate Democrats want to raise the national minimum wage from $7.25 an hour to $15 an hour. The result would be straightforward: higher wages, but also the closure of mom-and-pop stores; higher prices on everything from gas-station tacos to day care; a rise in unemployment, particularly among teenagers; and strain in low-wage, rural economies.

That, at least, is the argument being made by many economists, businesses, lobbying groups, and conservative politicians as the proposal comes under congressional consideration. It is an intuitive one. Democrats are proposing to more than double the wage floor to its highest-ever level, asking tens of thousands of businesses to give large raises to millions of workers. Make something more expensive, people buy less of it; make the wage floor higher, businesses will buy less low-wage work.