The Bozeman Business and Professional Women recently invited me to speak at a luncheon on ballot initiative I-151. This seeks an increase in Montana’s minimum wage to $6.15 from $5.15 per hour. I-151 includes an annual cost of living adjustment and exemptions for small businesses with gross sales of $110,000 or less. I was delighted to attend and learned a lot.

Polling indicates I-151 has overwhelming support. Montana mimics national trends showing large percentages of Americans favor raising the minimum wage. Twenty-three states now set a minimum wage greater than the federal level of $5.15 per hour.

Our economy increasingly rewards brains, not brawn. High human capital, usually an undergraduate degree, combined with good character, are now prerequisites for success. Investments in education, including technical training, are increasingly important. Politicians who ignore this reality jeopardize our future. Workers lacking these attributes struggle at the low-wage end of the employment spectrum. The situation is especially difficult for divorced women, who chose to forgo schooling to raise children. Who but a misanthrope could resist an effort to help these deserving moms?

The luncheon demonstrated that the cost of parading one’s good intentions is zero. I-151 supporters posture as defenders of America’s working class. Claiming the moral high ground, they revel in their role as challengers of the establishment. This tactic is a feel-good rallying cry. Here’s the question I asked supporters: Is your goal to “Do Something!” or is it to actually help our least skilled workers? My question was dismissed as that of an ideologue. Really?

A physicist understands gravity and a physician germ theory. This understanding is based on empirical observation about the way the world works. Neither believes that gravity or germs behave differently in Boston than in Bozeman.

Economics’ analog is the law of demand. Like laws of gravity and germ theory, it is based upon millions of observations. The law of demand tells us that all else being equal, the higher the price of a service or good, the less people will demand of it. The law of demand applies to grapefruit, cars, movies tickets, and to labor. Everyone, even the advocates for the minimum wage, understands this reality.

Do homeowners normally raise the asking price of a home that’s been languishing on the market? Does a department store seeking to clear out excess inventory raise prices? A contractor who believes that the higher his bid for a job, the more likely the contract, is most likely to go bankrupt. The labor market isn’t immune to this reality.

Raising the minimum wage will benefit those who keep their jobs. It will have no effect on the majority of workers, especially white collar ones, for their productivity and, hence, their pay, are already well above minimum wage.

However, mandating an increase in the price of labor does not magically increase workers’ productivity. Hence, some workers, those with the lowest levels of skills and education, will suffer. Why? First, because employers will have incentives to create fewer jobs. Second, higher minimum wages will attract workers with greater skills. They will displace low-skilled workers.

Here’s another irony. Employers may compensate for their increased costs by increasing prices. Since poor people are disproportionately likely to shop at places that pay minimum wage, e.g., fast-food outlets and big box stores, they’ll end up paying the higher prices. How does this help them?

An engineer who opposes a project because it violates basic principles of physics is not labeled an ideologue. Likewise, I’m not an ideologue for believing that a higher price of labor will cause employers to hire fewer workers. As Don Boudreaux, chairman of the economics department at George Mason University, notes, “The true ideologue is one who suspends his awareness of all that he knows about reality in order to continue to believe in some pet possibility -- some pet possibility that is inconsistent with reality.”

I share the good intentions of the supporters of I-151 and I believe our community has an ethical obligation to help the least fortunate among us. Laudable intentions, however, won’t alter one simple fact: minimum wage laws can set wages, but they cannot guarantee jobs. Those who ignore this are the genuine ideologues.