Would raising the minimum wage help to fill the more than 10 million job vacancies currently open? It makes some intuitive sense—higher pay will attract more workers. The trouble is that minimum wages have tradeoffs that cancel out that higher pay, so it wouldn’t work. As I explain in an op-ed for Inside Sources:
Workers earn more than wages. They also earn non-wage pay. If the law requires employers to raise wages, they can and do make up the difference by cutting non-wage pay. …
Restaurant workers, for example, might lose complimentary shift meals. Customers might leave smaller tips if they believe their server is getting a higher hourly wage. A restaurant owner might decide not to hire busboys and instead ask servers to add those duties to their already full plates. Retail workers might have to pay for formerly free parking, have fewer or shorter breaks, or lose employee discounts or tuition assistance.
Some employees might get their hours cut (an obvious tradeoff for which recent Nobel laureate David Card’s famous co-authored study failed to account).
Minimum wages don’t work as intended, but there is still a lot that policy makers can do to help get people back into the workforce. They should loosen job-killing occupational licenses, reform zoning and land-use regulations that inflate rents that could instead go to paying salaries, reform financial regulations that make it difficult for companies to hire and grow, and undo Trump-era trade barriers that are sludging up supply networks.