Commentary
Perhaps the most sophisticated argument in favor of the minimum wage law is the one based on monopsony (a single buyer of labor in this case) or oligopsony (very few potential employers). It is a counter to this riposte: If the minimum wage law is so great, if it really boosts wages to the level stipulated by legislative enactment, why be so chintzy and demand to raise it, only, to something like $12 or $15 per hour; why not boost it to, oh, $1 million per hour. Then we would all be rich.
Based on monopsonistic or oligopsonistic considerations, this attempt at a reductio ad absurdum can be rejected out of hand. However, the very concept of monopsony or oligopsony is problematic from a theoretical level; it implies interpersonal comparisons of utility, a real big no-no in economics….
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