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Affluent Christian Investor | December 8, 2023

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Minimum Wage Causes Substitution of Capital For Labor

(Photo by Wellcome Images) (CC BY) (Resized/Cropped)

(Photo by Wellcome Images) (CC BY) (Resized/Cropped)

More capital substitution for minimum wage labor… I was grateful and far more fortunate than today’s young minorities who badly need the experience you gain when first entering the labor force. I made 8 cents per hour delivering on my bicycle, age 12, when the minimum wage was 25 cents, but small businesses were exempt. I learned to operate a fountain, and transferred to a drive-in at 14 to manage the fountain for $1 a day. Because I was reliable, with a work record, and had taken electricity shop in high school, I was hired at Boeing at age 16 for 70 cents an hour. It was like a fortune to me. Child labor laws were not in force, as we had a war to win. So I was not a victim of child protection from work.

Jonathan Meer Vernon, Isaac Sorkin has some nice papers on capital-labor substitution in response to the minimum wage.

This is related to my work with Jeremy West on the minimum wage and employment dynamics, and also Jeff Clemens’s paper.


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