We Don't Know the Effects of Minimum Wage Increase

"Striking Workers, Brixton Ritzy" by M.o.B. 68  CC BY-SA 2.0

And the more I learn about his topic, the more I regard with suspicion those who seem to be quite sure about it. 

Economist Thomas Sowell once quipped that "there are no solutions; there are only trade-offs."  It's a brilliant line and rings true in a wide variety of contexts.  One of the contexts in which Sowell and many other economists apply this truth is the debate around minimum wage laws.  The common wisdom is that whatever economic gains we get from minimum wage laws, they are more than offset by job loss.  Sowell again:

Unfortunately, the real minimum wage is always zero, regardless of the laws, and that is the wage that many workers receive in the wake of the creation or escalation of a government-mandated minimum wage, because they lose their jobs or fail to find jobs when they enter the labor force. Making it illegal to pay less than a given amount does not make a worker’s productivity worth that amount—and, if it is not, that worker is unlikely to be employed.

The seeming soundness of Sowell's logic notwithstanding, it seems to me to be far from a settled matter based on the evidence.  Experiments are ongoing in places like New York, California, and Seattle, and some very telling data will pile up over the next two to three years. Like Elijah and the prophets of Baal, conservative and liberal economists alike have cast their offerings on the wood and have gathered to watch for fire. Thus far that has not been significant evidence tying minimum wage hikes to job loss in these places, but to be fair, we are still in the very early stages.  In the next few years, the picture should come into much sharper focus.

Aside from the actual evidence though, there are some flaws after all in the Sowell-ian logic.  I am far from qualified to go head--to-head intellectually with a figure like Sowell, but even I can raise a few issues here.  For one, his argument assumes a fundamental correlation between worker productivity and wages, a relationship which the past 40 years of data has completely undermined.  Furthermore, Sowell's argument assumes that governments should not or cannot play a role in defining a minimal compensation that human labor can be worth, which I think ignores the historical fact that many employers of labor will pay nothing when they are legally allowed to do so.

For many economists, the foremost concern appears to be that youth in particular can be priced out of the labor market when the minimum is too high.  To mitigate those effects, I see no reason why we can't have lower minimums for dependents whose jobs are not their sole resort for food and housing, similar to the laws for remaining on a parent's insurance plan.