3 ms·
> It is true that the definition of demand says that all else equal, a higher price results in less demand, but in the real world not else is equal when the pri
by TheCoelacanth 9y ago
> It is true that the definition of demand says that all else equal, a higher price results in less demand, but in the real world not else is equal when the price rises due to minimum wage increases. A higher price does not always mean less demand.
That is exactly the point I was trying to make and I think the article was trying to do the same. Unless you make the assumption that demand for labor is perfectly inelastic or is one of the very rare goods, like Veblen goods, that have a positive price elasticity of demand, raising the minimum wage would be expected to decrease the amount of labor demanded. If it doesn't, then one of those assumptions must be incorrect. Either labor has perfect or positive elasticity of demand (unlikely because very few things do, even things that most people would describe as absolute necessities) or there are more factors at play than just the law of demand.