Minimum Wage and the Supply Curve

The other day I read an interesting comment at Division of Labor.

Art Carden of Rhodes College

I’ve had a great time in Great Barrington, Massachusetts while I’ve been visiting the AIER. It’s absolutely beautiful up here, but I was at a coffee shop yesterday when I noticed a sign saying “please bus your own tables” (I paraphrase). I saw a similar sign at an ice cream place last week; I interpret both as examples of the deadweight loss from the state’s $8.00 per hour minimum wage. Someone somewhere might be willing to bus tables at coffee shops for $7.00 per hour, but they are prevented from doing so by state law.

Now let me see if I an interpreting this correctly. He is saying that if a restaurant can not attract sufficient labor at at a wage of $8.00 /hour all they have to do is lower the wage they are offering to $7.00/hour, for example, and they will be able to attract sufficient labor.

Now I know that opponents of the minimum wage always claim that demand curves slope to the left but I did never realize that they also believe that the supply curves also slope to the left.

\Cardem probably would respond that this is not what he meant even though it is what he says. Actually, to me this looks like a prime of example of what I’m starting to think of as the George Mason Economics syndrome. This syndrome is assuming you know something you do not know. Cardem assumed he knew that the restaurants in Great Barrington were not willing to pay $8.00 for someone to bus dishes. What he did not know is that the Massachusetts tourist industry is suffering from a labor shortage this summer because the usual supply of tourist trade workers from Eastern Europe and the Carribean has been cut off by anti-terrorism restrictions on immigrant labor by the Bush Administration. However, the Massachusetts tourist industry has become highly dependent on immigrant labor over the past decade because it can not attract sufficient domestic — read teenage –labor at the prevailing minimum wage. To attract labor at the minimum wage they have to import it from abroad.

Consequently, I stick with my original reading that Camden’s argued that the restaurant that can not attract labor at $8.00/hour will be able to attract that labor at $7.00 — that the supply curve slopes the same as the demand curve.

Many people assume that teenagers make the minimum wage. But if you check the data in 2007 373,000 16-19 olds were paid the minimum wage. But that is out of 5,915,00 16-19 year olds that were employed. So that means that only 6 % of teens were paid the minimum wage and 94% were paid more then the minimum wage.