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Monday, February 29, 2016

Does the New York Times Really Think Prices Don’t Matter?

Apparently, yes, but only for low-skilled labor

To the editors of the New York Times:

Arguing for a 107 percent increase in the minimum wage (to $15 per hour), you dismiss fears that such a wage hike will destroy jobs by asserting that “there is no proof for or against that position” (“Hillary Clinton Should Just Say Yes to a $15 Minimum Wage”).

While it’s true that the federal minimum wage has never been raised by such an amount, it is obtuse in the extreme to use this fact as a reason to plead ignorance of the likely consequences of a more than doubling of the minimum wage.

To probe the depth of your conviction that it is impossible, absent specific historical experience, to predict that an imposed 107 percent increase in price of some good or service will result in less of that good or service being purchased, here are some questions.

Do you think that we have no way of knowing what will happen to the amount of housing that is purchased if the government orders all home sellers to raise the asking prices of their homes by 107 percent? (If your home in the Hamptons or your condo on Columbus Circle is currently on the market, do you honestly have no prediction about what will happen to your prospects of selling your property if Uncle Sam forces you to more than double your asking price?)

What about a dictated 107 percent increase in college tuition? Or what if government commands all grocers to more than double the prices of the items sold in their stores? How about a mandated 107 percent hike in the price of newspaper subscriptions?

For each of these goods and services there is, by your reckoning, no “proof for or against” the position that such an enforced price rise will reduce the quantity of these goods and services that consumers demand.  So if you really believe what you write about the minimum wage, you must also claim ignorance of the consequences of these other price hikes.  Given your confessed ignorance, therefore, of economic reality, your readers would do better to seek policy advice from tarot cards or Ouija boards than from you.


Donald J. Boudreaux
Professor of Economics and Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University

A version of this letter first appeared at Cafe Hayek.

  • Donald J. Boudreaux is a senior fellow with the F.A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics at the Mercatus Center at George Mason University, a Mercatus Center Board Member, and a professor of economics and former economics-department chair at George Mason University.