David R. Henderson  

Reply to Student on Minimum Wage

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Smith's Benevolent Baker Quote... Tetlock and Counter-factual Hi...

Two weeks ago today, I gave a talk at Susquehanna University in Selinsgrove, Pennsylvania. I had a good time, by the way, and I estimate that, in the midst of a small snow storm, over 150 students and faculty attended.

One of the students I met and talked to afterward sent me the following query this morning:

I had a question on your stance about minimum wage and its effects on the economy. I have read a few articles about some positives and negatives, mostly negatives. Most articles site the low percentage of wage earners that actually work on minimum wage, and of those people many of which are high school or college age.

I have yet to find an argument that makes economic sense that would be in favor of raising the minimum wage and I was wondering if you could play devil's advocate and make a point about why it would be beneficial if there is any.

Also, if you had any personal experience with the topic while working through your professional career I would like know how that went.

The reason I ask is a lot of my liberal friends are arguing for the cause and I want to make a complete and well thought out argument against it to perhaps educate them on basic economics. Also, I just want to improve my knowledge on the subject for my future, wherever that may take me.


I wasn't sure what he meant by "personal experience with the topic" and so I answered about my personal experience, as a young man, with the minimum wage.

Here's my answer:

Let me give some context to the minimum wage discussion before answering your specific question about the devil's advocate part. It's very hard to deny the law of demand: so, when the minimum wage rises, there will be fewer low-productivity people employed at that higher wage. Most of the discussion has been about how many fewer. Is the demand for low-skilled workers elastic or inelastic? One thing that seems to be agreed on is that the reduction in employment for the kinds of minimum wage increases we've seen in this country in the last 2 or 3 decades is not large. But remember that "not large" could mean that a given increase in the minimum wage destroys a few hundred thousand jobs. That could well be "large" for many of those people in the few hundred thousand.

There is another reason besides, or instead of, inelasticity of demand that could cause the reduction in jobs to be not large: employers adjusting on other margins. So, for example, if they had previously provided food on the job to their low-wage workers, they might cut back on that. They might limit break time more. They might reduce the amount of time they spend training the workers to be in higher-wage jobs in the firm. Etc.

Most of the economically informed proponents of the minimum wage will admit the above points even if they don't talk about them. How do I know they will admit them? I don't. But here's why I strongly believe they admit it. It's BECAUSE most of them don't talk about it. If they thought there were a problem with these arguments, they would point out the problem(s).

So how do they argue for the minimum wage not having these effects? Here comes the devil's advocate part. They would say, "No, David, you're right if employers are hiring based on their demand curve. But we think there are pockets of monopsony (monopoly on the buyer's side) throughout the economy. When there's monopsony, employers, unconstrained by a minimum wage, will hire up to point where the value of marginal product equals the marginal factor cost. If employers have monopsony power,that is, if they on their own face an upward-sloping supply curve of labor, they know that a 10 cent increase granted to keep or hire one employee will not cost them only 10 cents: it will cost them 10 cents times the number of employees in that skill category. So the marginal factor cost is much more than than 10 cents an hour. So they keep wages lower than otherwise. A skillfully set minimum wage can cause employment to increase."

That monopsony explanation could explain why the reduction in jobs from a given minimum wage is not large. On the one hand, the standard analysis is right for the parts of the economy where there's no monopsony: in those parts, the minimum wage increase will cause the number of workers employed to fall. On the other hand, in the parts of the economy where there is monopsony, the minimum wage increase, if small enough, will cause the number of jobs to rise. Net effect: a small loss in jobs.

Now to my argument against the devil. I don't find the monopsony claim persuasive. Monopsony requires that the employer have no or few competitors trying to hire the same kind of labor. It is precisely the fact that the workers are unskilled that gives them many potential employers.

Now to the second part of your question. I think my first job, mopping floors and cleaning the bathrooms in the basement of the main building at the Minaki Lodge in Minaki, Ontario, paid slightly above the minimum wage. I didn't even think to ask. I was 16 and didn't even know the term "minimum wage." But when I was 21, I quit a relatively high-paying summer internship in the Canadian government bureaucracy, where I was learning very little, so that I could work as an unskilled laborer for some friends in southern Ontario who were installing swimming pools. They paid me the minimum wage at that time. We worked 6 days a week and typically 10 hours a day. So I made good money. They didn't pay me overtime even though, I'm guessing, the law required them to. By that time, I understood a lot about labor markets, having studied a lot of economics in those intervening years, and it never occurred to either them or me to have extra pay for overtime. Both sides understood that what we had agreed on was a good deal for all concerned.

Best,

David

P.S. I must hustle off to work now, but I'll write a further note explaining a more-sophisticated way of understanding the harmful effects of the minimum wage, that is, if you're interested.

That's my response. I will post further on the more-sophisticated case.


Comments and Sharing






COMMENTS (38 to date)
foosion writes:

As I understand it, the argument for raising the minimum wage is that empirically it appears to have something between no negative effect to a small negative effect. There may be positive effects, perhaps due to increased spending by those whose incomes have increased.

It obviously has benefits for those whose wages increase. It may also increase the wages of other low paid workers.

David R. Henderson writes:

@foosion,
You’re not looking economy-wide. We know that overall production is lower because the price of one input has been raised above its free-market level. You’re looking at one sector and forgetting that the higher incomes paid to people who keep their jobs come from someone else--employers and/or consumers--who therefore have lower real incomes. Overall, there is less real income because of the lower production I mentioned above.
The reason I didn’t give your argument as one that proponents make is that I was focusing on intellectually respectable arguments that economists could make and the only one I could think of is the monopsony argument under which, if the minimum wage is skillfully set, production would increase.

JJ writes:

David, I have a question regarding Minimum Wage and its effect.

Let's say the Minimum Wage goes up from $7 to $8. McDonalds sells their sandwiches at $5 currently. The anti-minimum wage argument states that McDonalds will respond to the minimum wage increase by increasing the price of their sandwiches to make up for the increased labor cost. As a result, the price of the sandwich goes up to $5.50. I assume they generate more revenue in that scenario. If that is the case, why didn't they raise the price of the sandwich in the first place before the minimum wage hike? They could have made more with a higher sandwich cost. Wouldn't that mean that their sandwiches aren't priced correctly in the first place because they are leaving revenue on the table. They should have priced at the equilibrium point where they generate the maximum revenue.

Aaron McNay writes:

David,

It seems like you can support an increase in the minimum wage, even while understanding economic principles. For example, rising the minimum wage increases the marginal cost of production for each firm that uses minimum wage labor. As a result, we should expect three things.

First, a firm will reduce its use of the production input that had is price increase (in this case minimum wage labor) and substitute to other goods, such as capital. This is the law of demand.

Secondly, as the marginal cost of production for all firms using minimum wage labor has increased, firms should also increase their prices so that their marginal revenue equals their marginal cost of production.

Third, the same firms should see their profits decrease. If the industry is perfectly competitive, we would expect the profit decrease to be temporary. It will return to zero economic profits in the long-run as firms exit. If the industry is not perfectly competitive, firms may see a long-run reduction in profits, as some firm will experience a loss of economic profits.

With these three factors, we would expect an increase in the minimum wage to: reduce total low-skill employment, result in higher prices, and a reduction in the profits earned by firms (at least temporarily).

The first factor acts as a transfer from some low skilled workers to other low skilled workers. The second factor results in a transfer from consumers (most of which earn more than the minimum wage). The third factor transfers income from business owners to low skilled employees (most of which earn more than the minimum wage).

Overall, the minimum wage can be seen as a transfer mechanism to low skill workers. I personally oppose the minimum wage, as it seems like a bad transfer system. It hurts some low skill workers and benefits many of the people making minimum wage who would not be considered low income. However, people could support it, even knowing its costs, if they felt that it was the best transfer system we could implement given our political constraints.

If I am missing something, please let me know.

Maniel writes:

Prof. Henderson,
I don't think there is any law which prohibits liberals from starting businesses and paying their unskilled employees above minimum wage. This might save some of those employees for whom it is against the law to work for less than that wage.

khodge writes:

I have often thought that government would much rather deal with big business than small business and that is why so much of the job of government is to make small business disappear, for example: government can deal with McDonald's a lot easier than with x number of McDonald's franchises.

I sort of can speak to the minimum wage, having owned a small flower shop (a franchise). From the beginning, the managing partner (a close relative) attempted to run the business as a large business and just assumed that we could afford however much we paid our employees. When we finally took her responsibilities away we had no way ratcheting down the the payroll which was especially damaging because we started the business a year before the 2007 depression began.

There is no doubt that we mishandled our expenses but what do you do once the economy turns south and stays there?

As an already overwhelmed owner/manager I was not going to fire existing employees, research laws which allowed me to hire cheaper labor, or even take on people who were begging me to let them work for nothing. Successful businesses cut down on the number of employees and cut corners where they can.

Radford Neal writes:

Another possible way for a minimum wage to increase employment is that it's free advertising.

Suppose MacDonalds pays $10/hour, and the minumum wage is $8/hour. Some people may not bother applying to work at MacDonalds because they mistakenly think MacDonalds pays minimum wage, and they aren't willing to work for $8/hour. Then the minimum wage is increased to $10/hour. Now more people know that MacDonalds must be paying at least $10/hour, and may therefore apply to work there. Effectively, it's free advertising for MacDonalds' hiring program.

Of course, if the minimum wage had not been a public policy issue, the media time spent on it would have been spent on some other issue. So depending on what people would have learned by paying attention to that other issue, the net result of this free advertising might be good or bad.

CC writes:

JJ wrote:

Wouldn't that mean that their sandwiches aren't priced correctly in the first place because they are leaving revenue on the table. They should have priced at the equilibrium point where they generate the maximum revenue.

JJ, I think the standard reply to that is:

Sure, if one company were required to raise their pay, and they could come out ahead by simultaneously increasing burger prices, then there's something logically inconsistent going on.

But if all the minimum wage payers are required to raise pay at once and they all increase burger prices, then it's possibly that the net result is that employment doesn't change, and the customers eat the cost.

Harold Cockerill writes:

So does the economic argument for a minimum wage increase rely on the employer monopsony condition? Are advocates saying they believe there are pockets of monopsony or have they identified those pockets? To paraphrase the Wendy's ad, "Show me the monopsony".

Mark Bahner writes:
As an already overwhelmed owner/manager I was not going to fire existing employees, research laws which allowed me to hire cheaper labor, or even take on people who were begging me to let them work for nothing. Successful businesses cut down on the number of employees and cut corners where they can.

Before saying anything, I want to emphasize that I'm a great admirer of owners of small businesses. I've never run a business except my own lawnmowing business as a kid. (It was brutal. ;-)) (I should have done baby-sitting, except I hated little kids. ;-))

Rather than "fire existing employees"...couldn't you have a group meeting and say, "We just can't make it with current salaries. I'm going to meet with each of you later. I'm going to have to cut pay, at least until business turns around. I'm so sorry to have to do this."?

And then meet separately with each employee, with a new salary offer? (Or perhaps reduced hours, or some combination of the two?)

ThomasH writes:

It seems that the best argument for an increase in the minimum wage is that the elasticity of demand in the long run is inelastic. If that is true (econometricians differ), then it means that a tax has been levied on owners, other workers and the low income workers who lose jobs/do not get hired, and customers to finance a transfer to the low paid workers who remain employed after the increase.

I am a bit skeptical that a small change in the wage would alter a profit-maximizing firm's mix of wage and non-wage conditions of work. But to the extent it does, that is an additional dead weight loss from moving away from the optimal mix.

The best argument against an increase in the minimum wage is that it is an inefficient way of transferring income to low paid workers. It would be much better to increase the Earned Income Tax Credit. But if making the personal income tax more progressive is not politically feasible, I'd say the increase being proposed is - notwithstanding its drawbacks - better than not increasing it.

My own experience with the minimum wage was of earning it in high school, summer, and university jobs. Since I was not one of the people who lost a job, I was quite happy when an increase came along in 1961. (Milton Friedman, alas, had not yet been successful in getting the EITC established at the time.)

James writes:

I'll play devils advocate. If the minimum wage goes up by x% and employment goes down by less than x%, then the total amount of wage income still increases so workers as a whole are better off. There is some evidence that this is what will happen for likely changes in the minimum wage.

One problem with the standard non-monopsony analysis is that it understates the damage. Say A is willing to work for $3/hour and B is willing to work for $4/hour and C for $5/hour. Also say that at a wage rate of $6/hour, there are employers willing to hire all of them. The producer surplus enjoyed by these three workers is (6-5) + (6-4) + (6-3) or $6 for each hour they earn the going wage.

If the minimum wage is raised to $7/hour, employers cut back on their hiring by, say, 1 worker. The familiar textbook diagram with the shaded triangles shows producer surplus decreasing by $1. But this outcome will only happen if employers let go of worker C and unless the workers have a market amongst themselves to decide who will be unemployed, there is no reason to suppose that the disemployed workers will be those with the highest reservation wages. If A is the one to be let go, then producer surplus in the labor market will decline by $3/hour and this is just as likely as B or C being let go.

genauer writes:

I am just wondering,

is anybody here interested,
that I contribute a little bit

from a German perspective,

where we just introduced a minimum wage this 1st of January

?

khodge writes:

Mark Bahner:
One of the saddest/funniest/most bizzare lines I've read in a blog comment I read a month or two ago: "As a big 4 CPA and a CFO I've never understood how a business person could not know how much money he owed."

I had sworn off ever owning my own business many years prior and yet...

I have the skills necessary to run a functional business but there are always priorities and making payroll was only one of many.

The bottom line is (1) the state raised the minimum wage and my payroll expense went up and (2) the economy did not recover until we had pretty much lost everything 5 years later (a year too late).

david writes:

Given that the contemporary hullabaloo focuses a lot on Card-Krueger, perhaps you could forward an account of the minimum-wage-reducing-externalized-search-costs-for-high-turnover-industries argument. This would also give the student an insight into the nature of modern labour econ theory - simple monopsony is a bit antiquated.

Arthur_500 writes:

Those who have no skills are forced out of the minimum wage labor market by those who actually have some skills. Therefore those who need the money most are not able to access those jobs.

Recently I listened to a woman employee of McDonald's on the Radio Program 'Marketplace.' She felt that as a single mother she should get paid a "living" wage.

As an employer I am not legally allowed to consider gender, marital status, dependents, etc in my hiring decision. Rather I must hire the best employee I can with the money available to me. If I must pay a single mother a "Living" wage then shouldn't I have the right to have her tubes tied, place the child in foster care and dictate what menu they should be eating? Am I to pay for the employee or for the employee's expenses?

If I have to pay $15 per hour for an individual who is barely capable of coming to work I will seek out employees who have some modicum of experience and supplement my procedures with machines and robots.

Those who need the money and jobs the most will get the least.

Anonymous writes:

Imagine a world which is similar to our own, except that people are endowed with only two discrete categories of intelligence, 70 IQ (group A) and 130 IQ (group B).

In our world, we already know that people with 70 IQ are much less effective at making decisions to optimize their situation in lives, and one of the ways that could be reflected is worse success at bargaining for wages. It could be reasonable in such a world to set a floor on wages, if you had determined that there was a productive job for every person with at at least the minimum wage you were setting (if there were jobs that would be worth less than this minimum wage, they would be an unproductive use of resources almost by definition).

Without the minimum wage in place, some of the group A citizens would take on jobs below the minimum wage simply because for them the costs of finding a job (information costs, search costs, what have you) may be too great to overcome with their limited intellectual capacity. So in this case, a minimum wage would bring the market closer to an efficient equilibrium, by constraining the choices of people to decisions that would be made by homo economicus, who is blessed with infinite reasoning capacity.

Perhaps this could be formalized into a more rigorous argument for some minimum wage in our world, although doing so in our continuous world is probably complex. This is an argument is unlikely to be made by fans of minimum wages, of course.

Shayne Cook writes:

I would frame my argument against a minimum wage law for your student as an objection to Federal minimum wage. It is ludicrous to think that a Federal minimum wage could be anything but sub-optimal (in every case) in an economy as diverse as that in the U.S.

'Arthur_500', above, refers to the "living wage" argument often used by politicians and other advocates of a higher Federal minimum wage. I'm not convinced a "minimum wage" could ever be considered a "living wage" in any circumstance. But I know for certain that a "living wage" is dramatically different in San Francisco, or even Williston North Dakota (right now), than it is in hundreds of thousands of smaller communities outside of major economic centers. A Federally mandated minimum wage - at any level - is either a joke in places like SF or Williston, or it is economically damaging to smaller communities.

In the the economics terms used here, both elasticity of demand for low-skilled workers and presence of monopsony are going to be local phenomena based on local economic factors. And they are going to be decidedly non-uniform across the full U.S. economy, and even highly variant in time domain across any local economy.

If a "minimum wage law" is to be considered at all, it should be considered at local (economy) level, or at least only at State level, accompanied with wide variance latitude for local exceptions.

rebeccafrank writes:

Minimum wages should not be encouraged where there is productivity and employment while no growth in an individual's career. Moreover people who get into these jobs are either naive or unemployed, who get caught into this trap.

Ano nymous writes:

There is the old argument that people who make more money can consume more, and thus stimulate the economy relative to, say, be slaves.

I often argue in favour of minimum wages under the principle that, when the guaranteed wage is at least decent, they will invest personal time and financial resources to get enough skills to earn that wage.

So, then, an economy can have higher TFP growth in the long run with higher minimum wages.

And that's not considering questions of inequality or the difficulty of poor workers collaborating to negotiate - and keep in mind that a theoretical optimum would come when all parties have similar negotiating power.

Ryan writes:

RE: JJ:

Wouldn't that mean that their sandwiches aren't priced correctly in the first place because they are leaving revenue on the table. They should have priced at the equilibrium point where they generate the maximum revenue.

Firms maximize profits (revenue minus cost); they do not maximize revenue.

khodge writes:

The first time I read about Card-Krueger was in their book on econometrics. At the time I was struck by how shallow their approach was. The criticisms of their work were not that much better. Looking at the fast food industry misses the small businesses living at the margins. Of course the large franchises want a minimum wage: what better way to drive out the small competitors? Big government and big business both want barriers to entry: big business does not want the competition (esp. since successful small businesses grow into large competitors) and there are no political points to be scored and lots to be lost by driving existing small businesses out of business with fines and petty regulations.

Rachel writes:

I don't endorse this view, but I think you could make a strong argument for minimum wage in the following world:

a) All workers are capable of earning enough to stay above the poverty line if they choose to work hard.

b) All workers prefer working hard to not being employed at all.

c) Some workers would prefer to work less and earn less per hour. Given the current welfare system, this choice has negative externalities on society.

Given these assumptions, a minimum wage hike may be a second best solution to the problems created by the welfare system. Of course, these assumptions probably aren't that plausible.

Mark Bahner writes:
I would frame my argument against a minimum wage law for your student as an objection to Federal minimum wage. It is ludicrous to think that a Federal minimum wage could be anything but sub-optimal (in every case) in an economy as diverse as that in the U.S.

And the federal minimum wage is against the law (the Constitution) too boot.

But of course, not only does virtually no one know this, most "liberals" even make fun of people who do know this:

Pretending to understand history and the Constitution

ThomasH writes:

The minimum wage creates as distortion in the optimum use of labor which causes a loss of total income but which arguably redistributes income to low paid workers (that remain employed). It is understandable that Libertarians who dislike interference with the market and generally do not like redistribution do not like the minimum wage.

A multitude of special treatments of business income cause the average corporate tax rate to be far below the marginal rate and are not the same for all firms in all activities create a distortion in the optimum use of capital which cause a loss in total income but which redistributes income to owners of businesses. Both the minimum wage and the lack of uniformity of the corporate tax rate cause economic losses and redistribute income. I do not understand why Libertarians seem to be more bothered by the minimum wage than the lack of uniformity in the corporate tax rate.

Is there a good reason for this difference?

Super Hans writes:

Your monopsony, or lack thereof, argument makes sense.

But what about over-supply of low wage labor? In that case, the competition is shifted from employer to employee, which would depress wages below their value, no?

David R. Henderson writes:

@ThomasH,
You write:
I do not understand why Libertarians seem to be more bothered by the minimum wage than the lack of uniformity in the corporate tax rate.
And:
Is there a good reason for this difference?
I think so. The reason is that the minimum wage hurts some of the most vulnerable people, making it hard for them to acquire skills in the labor market.

David R. Henderson writes:

@Rachel,
I don’t see how your conclusion follows from your assumptions. Did you leave out a step or two?
@Super Hans,
But what about over-supply of low wage labor? In that case, the competition is shifted from employer to employee, which would depress wages below their value, no?
No. Think about why? A hint: A greater supply does not "depress wages below their value."

martin writes:

JJ wrote:

Let's say the Minimum Wage goes up from $7 to $8. McDonalds sells their sandwiches at $5 currently. The anti-minimum wage argument states that McDonalds will respond to the minimum wage increase by increasing the price of their sandwiches to make up for the increased labor cost. As a result, the price of the sandwich goes up to $5.50. I assume they generate more revenue in that scenario. If that is the case, why didn't they raise the price of the sandwich in the first place before the minimum wage hike? They could have made more with a higher sandwich cost. Wouldn't that mean that their sandwiches aren't priced correctly in the first place because they are leaving revenue on the table. They should have priced at the equilibrium point where they generate the maximum revenue.

Suppose McDonalds makes $1 per burger at price of $5. At the price of $5.50 they would make $0.50 more per burger, but they would sell less burgers. Presumably so much less that they make more money at the price of $5.

Suppose that at a price of $5 they sell 1,000,000 burgers per day. And at $5.50 they would sell 500,000 burgers per day. At $5 they would make:

1,000,000 * $1 = $1,000,000

While at $5.50 they would make:

500,000 * $1.50 = $750,000

Now suppose the higher minimum wage raises costs $0.55 per burger.

At the price of $5 the profit is reduced to $0.45, so per day:

1,000,000 * $0.45 = $450,000

While at the price of $5.50 they make per day:

500,000 * 1.05 = $525,000

martin writes:

A little mistake in my previous post, last line should be:

500,000 * $0.95 = 475.000

Mark Bahner writes:
I do not understand why Libertarians seem to be more bothered by the minimum wage than the lack of uniformity in the corporate tax rate.

I'll tell why I'm more bothered by the *federal* minimum wage than by lack of uniformity in the tax code.

1) Exactly as was pointed out by Shayne Cook, it's insane to think that it's a good idea to have one minimum wage for the whole country, when the conditions (such as cost of living) are so different across the country:

Cost of living map of the U.S.

2) And as I pointed out, it's against the law. It violates the Constitution. That's very important, because once the federal government routinely violates the Constitution (as it does) we lose all sorts of protections against harm. They literally can do virtually anything. There's the Russian joke, "We pretend to work, and they pretend to pay us." In this case, it's "They pretend to follow the Constitution, and we pretend to care."

liberty writes:

I think there are other arguments for the benefits of the minimum wage -- you even fail to note that while the effect may be "large for those 100,000" it is also large in a positive way for all the rest who do not lose their jobs! ... But the question is whether this balances out the job losses and the effect of the harm the minimum wage has on all those small businesses that cannot afford workers now, and so forth. There are many arguments against as well.I look forward to your follow-up post.

I haven't had a chance yet to read all the comments, so I hope I am not repetitive,but to the monopsony question, empirically, you say:

"Monopsony requires that the employer have no or few competitors trying to hire the same kind of labor. It is precisely the fact that the workers are unskilled that gives them many potential employers."

What about all the rural areas where there is just one factory that provides most of the jobs - sometimes they pay new entrants around the minimum wage level, no? There are still quite a few of these.

Walter E. Wiliams writes:

Perhaps the most neglected aspect in all discussions about minimum wages, or any other price control, is that it leads to allocation by seller preferences.

Super Hans writes:
No. Think about why? A hint: A greater supply does not "depress wages below their value."
You're right, that was poorly worded on my part, as wages are always below (or at most at) their value.

What I meant was that wages will be further depressed by increased supply. Could that be an argument for minimum wage?

LD Bottorff writes:

Shayne Cook makes the best point. Even if there is evidence that a minimum wage could be set that would raise employment under certain conditions, those conditions are not going to exist in every jurisdiction. This is part of the problem with Federal involvement in the economy; California has the most representation in Congress, and the delegates from that state are likely to define reasonable based on the experiences of their constituents. So, a reasonable minimum wage is going to be set based on conditions in California, Texas, and Florida, regardless of the impact on Kentucky and Mississippi.

Dr. Henderson,

Your claim about monopsony is half right. Of course there is little evidence of there being standard monopsony in low-skill labor markets - precisely because there is little skill required, which means substitution between industries is fairly easy.

However, this does not address the claims about the existence of *dynamic* monopsony, where search costs create similar conditions as classical monopsony and allow firms to pay below marginal product. (Though I am not super convinced that this is super important in the real world, and even if it were, my solution would be to lower the imperfection of information somehow, not to artificially increase price [of labor]).

Sam Raptis writes:

Dr. Henderson, et al.,

Could anyone explain the reasoning behind Henderson's claim toward the end of the article that "It is precisely the fact that the workers are unskilled that gives them many potential employers." is true? I'm not doubting it, but I found it confusing since I would tend to think the opposite.

Super Hans writes:

Being unskilled certainly opens you up for employment in a variety of different jobs. Although one could argue that being skilled doesn't preclude unskilled jobs.

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