WE HAVE ALREADY seen some of the harmful results of…
““WE HAVE ALREADY seen some of the harmful results of arbitrary governmental efforts to raise the price of favored commodities. The same sort of harmful results follow efforts to raise wages through minimum wage laws. This ought not to be surprising, for a wage is, in fact, a price. It is unfortunate for clarity of economic thinking that the price of labor’s services should have received an entirely different name from other prices. This has prevented most people from recognizing that the same principles govern both.””
About This Quote
This interpretation was drafted with AI assistance. It is one reading of the quote, not the author's own explanation.
Treating wages as a distinct concept obscures that they function like any other price, leading to unintended negative outcomes when manipulated.
In simple terms: Wages are prices; changing them has similar effects to changing other prices.
Key Takeaway
Recognize wages as prices to evaluate policy impacts.
Themes
economics
policy
labor markets
price theory
Mood
cautious
analytical
Type
economic
policy.
When to use this quote
- minimum wage legislation
- tax policy
- price controls
- labor negotiations
Key Concepts
price elasticity
unintended consequences
market distortion
Questions to Reflect On
- How do wage controls affect employment levels?
- What alternatives exist to improve worker welfare without price distortion?
A Different Perspective
Assumes all labor markets are perfectly competitive, which is often not the case.