By John Hood
RALEIGH — The minimum wage in North Carolina is $7.25 an hour — no different than the federal minimum. Other jurisdictions have set higher wage floors, by legislation or referendum. In the District of Columbia, nearly all employers must pay at least $17.50 an hour.
States with Democratic-controlled governments such as Washington ($16.66), California ($16.50), Illinois ($15.00), and Massachusetts ($15.00) have much higher minimum wages than our state. But so do the likes of Missouri ($13.75), Nebraska ($13.50), and Florida ($13.00), each governed by Republicans.
The North Carolina General Assembly isn’t going to enact a minimum-wage bill. And our state lacks a citizen-initiative process to place propositions directly on the ballot. But rather than just tell you a minimum-wage hike isn’t going to happen, I’ll tell you why a minimum-wage hike shouldn’t happen.
Wages aren’t arbitrary. They are market prices that reflect ever-changing conditions and preferences among prospective employers, employees, vendors, and consumers. When government intervenes to fix a price — be it a floor beneath wages or a ceiling above consumer prices — there are direct beneficiaries, yes, but also direct and indirect victims whose losses must be taken into account.
In the case of minimum wages, for example, keep in mind that would-be workers aren’t just competing with other local folks for a fixed set of entry-level jobs. They’re often competing with faraway workers — either because the business itself might move or, more likely in this case, because sectors with lots of minimum-wage workers have the option of substituting technology made elsewhere for workers hired locally.
Been in a fast-food restaurant lately? You may well have placed your order on a kiosk rather than spoken to a cashier. You’ve probably also used scanners and kiosks to buy groceries or park your car. These technology substitutions are occurring across the country, regardless of wage regulation, but they are happening faster and more extensively in states with higher minimum wages. As automation, robotics, and artificial intelligence keep evolving, the market for entry-level and low-skill workers will adjust accordingly.
For decades, politicians and policy analysts have argued vociferously about the tradeoff between wage mandates and job creation. Among economists, most agree that when government hikes minimum wages, some current or prospective workers experience income gains while others lose their jobs (because it was no longer profitable for employers to hire them at a cost higher than the value of the work they would do). What economists disagreed about was the size of each group — the gainers and the losers — and the relative magnitudes of their gains and losses.
I think a fair reading of the empirical evidence is that minimum wages do more harm than good. Further, the most disadvantaged workers in the labor market — young people just starting out, others transitioning from addiction or the criminal justice system, and those with disabilities — are the most likely to suffer dislocation, while teenagers from middle-income or even affluent households enjoy much of the income gains.
The National Bureau of Economic Research just released a study of minimum-wage hikes during the 2010s. Written by economists at Texas A&M and the University of California at San Diego, the study found that large increases in minimum wages “significantly reduce employment and
labor force participation for individuals of all working ages with severe disabilities,” resulting in lower incomes and higher dependency on public assistance.
Another new NBER paper by scholars at Clemson, Duke, Stanford, George Mason, and UC-Irvine tested the proposition that higher wage floors actually increase employment by inducing more people to apply for the better-paying jobs. “We find no evidence that higher minimum wages increase job search for low-skilled jobs,” they concluded. “Instead, the evidence suggests that higher minimum wages decrease the number of workers seeking employment.”
Should policymakers seek to raise wages in North Carolina? Absolutely. They should do so by improving education, fostering investment in tools and other capital, and otherwise making the labor of entry-level workers more valuable. Let’s help them truly earn more.
John Hood is a John Locke Foundation board member. His books Mountain Folk, Forest Folk, and Water Folk combine epic fantasy with American history (FolkloreCycle.com).
My Rebuttal: The Case for Raising North Carolina’s Minimum Wage
John’s argument against raising North Carolina’s minimum wage is based on outdated economic assumptions and selective data. While it’s true that wages reflect market conditions, the current $7.25 per hour minimum wage is not a reflection of a functioning labor market—it’s a failure to adjust for inflation and productivity gains over the past 15 years.
The claim that wages are determined solely by market conditions ignores that many states—including Republican-led ones like Florida, Missouri, and Nebraska—have already raised their minimum wage without catastrophic job losses. If a higher minimum wage were as economically destructive as John suggests, these Republican-controlled states wouldn’t have supported wage hikes. Furthermore, businesses in North Carolina are already paying above $7.25 to attract workers in many industries. The only people earning the minimum wage are those working for companies that refuse to adjust to real-world labor demands. If we believe in free markets, we should recognize that the stagnant minimum wage is a government-imposed floor that has remained artificially low due to political inaction, not economic necessity.
John cites studies suggesting that raising the minimum wage reduces employment, particularly for disadvantaged workers. However, this cherry-picks older or flawed research while ignoring newer, more comprehensive studies. A 2021 study published in the Quarterly Journal of Economics analyzed 138 state-level minimum wage increases over nearly 50 years and found no evidence of significant job loss. A 2022 paper from the Center on Wage and Employment Dynamics found that states that raised their minimum wage saw higher earnings without negative employment effects. States like California and Washington, which have the highest minimum wages in the country, also have some of the highest job growth rates. The real-world data does not support the doomsday claims about job losses due to higher minimum wages. Instead, raising wages puts more money into the hands of workers, which boosts consumer spending, strengthens local economies, and reduces reliance on government assistance.
John argues that increasing the minimum wage will accelerate automation, but this misrepresents the role of technology in the labor market. Automation isn’t tied to minimum wage laws—it’s a global trend affecting both high-wage and low-wage economies. McDonald’s and Walmart have introduced self-checkouts and kiosks in states with both high and low minimum wages. Companies invest in automation to increase efficiency and profits, not just because of labor costs. Using automation as an excuse to suppress wages is not a solution—it’s a deflection. If we are moving toward a more automated economy, then it is even more important to ensure that workers are paid fairly and have economic stability.
One of the biggest flaws in John’s argument is the claim that raising wages will harm disadvantaged workers. In reality, a higher minimum wage reduces poverty and decreases reliance on public assistance programs. When workers are paid a living wage, they can afford basic necessities without needing food stamps or government aid. Multiple studies have shown that increasing the minimum wage leads to lower turnover rates, higher productivity, and improved job satisfaction. The idea that raising wages primarily benefits middle-class teenagers is outdated and ignores the millions of adults—many of them parents—who rely on low-wage jobs to survive.
Ultimately, raising the minimum wage is not just an economic necessity; it is a moral imperative. North Carolina’s workers deserve fair pay that keeps up with the cost of living. Ignoring this issue and allowing wages to stagnate while inflation rises only deepens economic inequality. If other states—including Republican-led ones—can raise wages without economic collapse, North Carolina has no excuse to keep its workers trapped in poverty wages.
As you already know Mr. Hood but would never admit. In America the rich get richer, the poor get poorer and the middle class pays all the taxes and do all the work.
Dear Stupid,
I appreciate your engagement with the discussion. I understand that my previous response was lengthy and may have been overwhelming. Here’s a more concise summary of the key points:
• Market-Driven Wages: Wages are determined by market conditions, reflecting the balance between employers’ needs and workers’ skills.
• Potential Job Losses: Raising the minimum wage could lead to job cuts, especially for entry-level positions, as businesses might automate tasks or reduce staff to manage increased labor costs.
• Impact on Vulnerable Workers: Studies indicate that significant minimum wage hikes can adversely affect workers with disabilities, leading to reduced employment opportunities and increased reliance on public assistance.
• Alternative Solutions: Instead of mandating higher wages, focusing on education and investment in worker skills can enhance productivity, leading to naturally higher wages without potential negative side effects.
I hope this summary clarifies the main arguments. If you have any specific questions or need further details on any point, feel free to ask!
Your comment is to long for us dumb redneck please shorten it up
this guy always has the most lukewarm takes