By Steve Buckstein

Decades of research and experience tell us that raising the government-imposed minimum wage results in fewer younger and lower-skilled individuals being hired, and in some of them losing jobs they previously held at lower wages.*

Decades of research and experience also tell us that requiring landlords to charge lower rent than market conditions dictate results in fewer housing units being built, making housing shortages worse and raising housing costs in areas not subject to rent controls.**

During last year’s minimum wage debate in Oregon, pointing out the negative consequences was not enough to stop the legislature from imposing significant wage increases. Likewise, this year the legislature may allow local jurisdictions to impose rent controls even though opponents will surely point out the negative consequences of this policy also.

It now seems obvious what is happening. Supporters of minimum wage increases and rent control aren’t blind to their negative consequences; they simply refuse to acknowledge them because the political benefits outweigh the real costs imposed on those forced to endure them.

The harm done by minimum wage increases and rent control is so obvious that we should probably stop saying that their negative consequences are “unintended.”  Rather, we should say that their negative consequences are “unacknowledged” because their supporters refuse to admit that they exist.

* Making Youth Unemployment Worse, Randall Pozdena and Steve Buckstein, Cascade Policy Institute, December 2016

** The Rent Is Too Damn High! — Why Rent Control Won’t Help, Steve Buckstein, Cascade Policy Institute, September 2016

Steve Buckstein is Founder and Senior Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

One thought on “Bad Consequences of Public Policies Aren’t Really “Unintended,” Just “Unacknowledged”

  1. Rent control has a lot of negative consequences. In addition to what Steve mentions above, rent control can result in people “hoarding” living space because over time it becomes very cheap…for them. An individual may, for example, keep an apartment that he doesn’t often use. Rent control laws generally have exceptions, too, perhaps only applying to, say, rents below a certain level. In that event, developers will tend to build only higher end apartments, thus driving up the average rent rates in an area. The people who benefit from rent control can thus be the opposite of what is intended. In addition, areas that have had rent control laws for years have a far greater number of run-down dilapidated buildings than areas that don’t. Often the rents simply don’t cover the expenses to maintain the buildings, so owners don’t have the incentive, let alone the ability, to keep up their property. Sometimes landlords are even forced to walk away from their property. For an excellent discussion of rent control laws, see Thomas Sowell’s Basic Economics, the chapter on Price Controls.

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