The argument against increasing the minimum wage often relies on what I call “economism”—the misleading application of basic lessons from Economics 101 to real-world problems, creating the illusion of consensus and reducing a complex topic to a simple, open-and-shut case. According to economism, a pair of supply and demand curves proves that a minimum wage increases unemployment and hurts exactly the low-wage workers it is supposed to help. The argument goes like this: Low-skilled labor is bought and sold in a market, just like any good or service, and its price should be set by supply and demand. A minimum wage, however, upsets this happy equilibrium because it sets a price floor in the market for labor. If it is below the natural wage rate, then nothing changes. But if the minimum (say, $7.25 an hour) is above the natural wage (say, $6 per hour), it distorts the market. More people want jobs at $7.25 than at $6, but companies want to hire fewer employees. The result: more unemployment. The people who are still employed are better off, because they are being paid more for the same work; their gain is exactly balanced by their employers’ loss. But society as a whole is worse off, as transactions that would have benefited both buyers and suppliers of labor will not occur because of the minimum wage. These are jobs that someone would have been willing to do for less than $6 per hour and for which some company would have been willing to pay more than $6 per hour. Now those jobs are gone, as well as the goods and services that they would have produced.

The minimum wage has been a hobgoblin of economism since its origins. Henry Hazlitt wrote in Economics in One Lesson, “For a low wage you substitute unemployment. You do harm all around, with no comparable compensation.” In Capitalism and Freedom, Milton Friedman patronizingly described the minimum wage as “about as clear a case as one can find of a measure the effects of which are precisely the opposite of those intended by the men of good will who support it.” Because employers will not pay people more money than their work is worth, he continued, “insofar as minimum-wage laws have any effect at all, their effect is clearly to increase poverty.” Jude Wanniski similarly concluded in The Way the World Works, “Every increase in the minimum wage induces a decline in real output and a decline in employment.” On the campaign trail in 1980, Ronald Reagan said, “The minimum wage has caused more misery and unemployment than anything since the Great Depression.” Think tanks including Cato, Heritage, and the Manhattan Institute have reliably attacked the minimum wage for decades, all the while emphasizing the key lesson from Economics 101: Higher wages cause employers to cut jobs.

In today’s environment of increasing economic inequality, the minimum wage is a centerpiece of political debate. California, New York City, and Seattle are all raising their minimums to $15, and President Barack Obama called for a federal minimum of $10.10. An army of commentators has responded by reminding us of what we should have learned in Economics 101. In The Wall Street Journal, the economist Richard Vedder explained, “If the price of something rises, people buy less of it—including labor. Thus governmental interferences such as minimum-wage laws lower the quantity of labor demanded.” Writing for Forbes, Tim Worstall offered a mathematical proof: “A reduction in wage costs of some few thousand dollars increases employment. Obviously therefore a rise in wage costs of four or five times that is going to have significant unemployment effects. QED: A $15 minimum wage is going to destroy many jobs.” (Of theoretical arguments in favor of a higher minimum wage, he continued, “I’m afraid I really just don’t believe those arguments.”) Jonah Goldberg of the American Enterprise Institute and National Review chimed in, “A minimum wage is no different from a tax on firms that use low-wage and unskilled labor. And if there’s anything that economists agree upon, it’s that if you tax something you get less of it.”