Standard economic logic: when you raise the price of something people buy less of it. Raise the price of labor and you'll create disemployment effects; hurting the people you're trying to help.
Then comes empirical work: Card and Krueger can't find disemployment effects after minimum wage is raised in a couple of states. Some other studies find the same thing
Other studies do find disemployment effects. Sometimes quite significant.
Takeaway from the empirical work; measuring disemployment effects is messy business. Also, conditions matter. Obviously the important condition the minimum wage depends on is how far it deviates from the market wage.
The picture we have in our heads of the typical minimum wage earner is mostly false. Minimum wage earners are as likely to be from high income households as low-income households.
The cost of higher pay is (somewhat) passed onto consumers, who are often poor. How much of the cost is an important matter, and disappointingly neglected in the article.
Also, What economic ideas are hard to popularize?
Comparative Advantage is the most popular answer in the comments. It is the first thing that came to my mind.
Tyler Cowen gives tax incidence theory as an answer.
Comparative Advantage is the most popular answer in the comments. It is the first thing that came to my mind.
Tyler Cowen gives tax incidence theory as an answer.
