Mises on Minimum Wage

“the supply of labor exceeds the demand for labor. Institutional unemployment emerges.”

• Mises, Human Action, “Minimum Wage Rates”

Mises treats the minimum wage as a price control on labor. In Human Action, the relevant margin is not whether a higher wage sounds humane, but whether the mandated rate stands above the wage that would have cleared the unhampered labor market. If it does, the quantity of labor offered exceeds the quantity employers are willing to buy at that rate.

The result is “institutional unemployment”: unemployment produced by the intervention itself. The policy can transfer jobs or bargaining gains to protected insiders, but it does not make capital more plentiful or labor more productive. Mises therefore treats the wage floor as an inappropriate means for raising real wages generally.

See Also

• Human Action - primary source for the minimum-wage-rate passage
• Ludwig von Mises - author reference
• State Power and Intervention - broader intervention frame
• Knowledge Problem - price and wage signals as dispersed information
• Economic Calculation Problem - adjacent calculation frame
• Rothbard on Price Controls - related maximum-price-control case
• IMF Carbon-Budget and Wage-Floor Conditionality - thesis applying the wage-floor claim to IMF conditionality

Sources

• Human Action: A Treatise on Economics (Full Text) - “Minimum Wage Rates” discussion of market wage rates, compulsion, and institutional unemployment