19.
The Monopsony Model
A fallback position for the advocates of the minimum wage law is to cite
the case of monoposony power among employers. Monopsony is defined as
a single buyer of labor -- that is, there are no other employers from
whom a worker could seek employment. In the case of a monoposony, it is
argued, the details of the supply and demand analysis depicted in Section
1 are irrelevant. In the technical model of a monoposonist, the employer,
when faced with a higher minimum wage, will actually hire more, not fewer,
workers -- at least up to a point. But to concede this as true does not
invalidate the fact that artificially higher wages will price some number
of workers out of jobs in the more common non-monopsonistic markets.
We are again at the conclusion that the minimum wage law helps some
workers at the expense of other workers who lose their jobs.
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