Fallacy - Minimum Wage Laws Help the Poor

Minimum wage laws makes it illegal to enter into work contracts where the salary offered is below a certain threshold. It does not matter if both the employer and the employee agree to the proposed salary. If it is too low, the contract is illegal. There will be penalties and fines.

This means that a number of contracts that were once valid become illegal. They must be terminated. There will be new salary negotiations at a higher rate. Some will get this higher rate, and others won't. No new jobs are created in this process. However, a number of jobs will disappear. The net result of minimum wage laws is therefore an increase in salaries for some at the expense of others who loose their jobs.

The tragedy here is that low paying jobs are often entry level jobs that help poor people get into the job market. After a few months, or years in the workforce, most are able to find better paying jobs. With fewer entry level jobs available, more people become permanently shut off from the job market. Minimum wage laws are therefore a hindrance for the poor in their efforts to better their situation.

By Ponchitos at English Wikipedia, CC BY-SA 3.0, Link