Art Carden writing in Forbes (May 13 2011) magazine expresses the answer to this question – such a critical question in N.Z. right now – very well:
Someone once asked me why economists care so much about the minimum wage. It reduces employment for the poor, to be sure, but the efficiency effects are probably pretty small compared to the effects of other policies. So why do economists care so much about the minimum wage when there are other policies that inflict greater damage?
It’s a good question, and an important one. The welfare loss might be small–though this is itself debatable–but the relevance of economic thinking is what is important. Beyond its consequences for the poor, I care about the minimum wage because it brings into high relief the fundamental differences between the anti-economic way of thinking and the economic way of thinking.
The anti-economic way of thinking sees the minimum wage as a policy whereby those endowed with Goodness and Mercy redistribute possibly ill-gotten wealth from the rich to the poor and protect the weak from exploitation. According to this view, the only reasons to oppose the minimum wage are ideology and sheer meanness. Just as the only reason someone could possibly oppose a war is because he or she hates America, the only reason someone could possibly oppose the minimum wage is that he or she hates poor people. Or so some might think. The economic way of thinking sees the minimum wage as exactly what it is: interference that destroys wealth, encourages wasteful rent seeking, and hurts exactly the people it is alleged to help.
The “anti-economic way of thinking sometimes seems to thrive in N.Z….. and we all suffer when it does (thanks to NZBR for the alert).