10.
Fixed Number of Jobs?
One of the unexamined faulty assumptions held by minimum wage advocates
is that there is a fixed number of jobs in the economy. This is
plainly false. The claim is often made in the context of denying that
the minimum wage will cost jobs, by reasoning that employers have to
have some certain number of workers to get the job done. As an example,
it may be argued that a restaurant operating with 15 workers per shift
will not be physically able to lay off some number of them. However,
it must be realized that there is always more than one way to accomplish
a given task. There is no reality-fixed requirement to use the current
mix of labor and capital. As the wage is legislated up, employers can
become very clever in substituting now relatively less expensive capital
for now relatively more expensive labor. (In the restaurant example,
automated dishwashers for human dish-washers.) This very thing happened
with elevator operators. It is obvious today, but in the early 1960's
it may have been hard to imagine that higher wages for elevator operators
would result in virtually no remaining elevator operator jobs. Once the
price was set too high, substitutes for human elevator operators in the
form of automated elevators became the norm. This process also happened
with movie ushers. Theater owners cleverly found they could substitute
a string of small light bulbs up and down the aisles for the labor of
teenage ushers with flashlights. (Sixteen-year-olds and small light
bulbs do not typically come to mind as substitutes for one another,
but when profits in a competitive economy are at stake employers have
to become very creative.)
The other half of this mistaken rebuttal is that lower wages will not
create new jobs. But again there is no fixed number of jobs; the demand
for employees is downward sloping as it is for all economic goods. As a
personal example, I do not like to wash my car, and if it costs me $10
to have it washed I'll prefer to drive a dirty vehicle. But if someone
offered to wash my car each Saturday morning for $4.00 they would have
an ongoing job. Jobs
are
price sensitive!
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