Minimum wage laws also extended the Depression. That from Amity Shlaes, in The Minimum Wage Makes Depressions Worse. (cross post from Outrun Change.)

In a lousy economy, forcing wages above the value of the output makes employment worse. When there is currency deflation the effect is compounded. Adding another layer of minimums every couple of years and slowly gathering more employers into the minimum wage rules further compounds the effect.

If you can’t afford the staff you have, and you can’t reduce wages, what options are left? Lay off more employees. Shrink your company.

And that’s what employers had to do in order to avoid collapse and closing their doors. You could lay off a bunch of people or fire everyone.

Minimum wages, and especially the recurring rounds of increases in minimums, worsened and extended the Great Depression.

If you want the explanation in a short version instead of my 100 word summary, check out Ms. Shlaes article, linked above.

If you want a 498 page explanation of the damage Presidents Hoover and Roosevelt caused to the economy, check out Forgotten Man, also from Ms. Shlaes.

The 320 page graphic edition will be released later this month.

I have previously discussed the destruction and devastation that was a deliberate, integral, and immoral goal of the New Deal: Economic destruction from the New Deal just keeps rolling on.


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