That’s one of the most common economic beliefs, and it mostly comes from older “free-market” theory, not real-world data.
Economists like Thomas Sowell, in his bestselling book Basic Economics (6th Edition, 2020), argue that any regulation, such as minimum or living-wage laws will distort markets and hurts small businesses. Sowell’s book is clear and popular for explaining classical “laissez-faire” ideas: that if government simply stays out, the market will naturally balance prices and jobs.
But newer, data-driven research tells a different story. In Myth and Measurement: The New Economics of the Minimum Wage (Princeton University Press), economists David Card and Alan Krueger tested these theories using real-world data instead of assumptions. They studied what actually happened when one state (New Jersey) raised its minimum wage and a neighboring state (Pennsylvania) did not.
Their finding: raising wages did not reduce employment and often improved business performance through lower turnover, better productivity, and stronger consumer spending. That research was so influential that David Card received the 2021 Nobel Prize in Economics for transforming how we study labor markets.
Since then, dozens of follow-up studies from universities, the Federal Reserve, and the Economic Policy Institute have confirmed the same: modest, phased-in wage increases lift pay without causing broad job loss and often help small businesses by boosting local demand.
That’s exactly why the H.E.A.L. Act combines a regional living wage with transition credits for small businesses making sure local employers have time and support to adjust. It’s not top-down control; it’s evidence-based policy that builds an economy from the middle out.
I encourage you to read both authors:
For the classic free-market view: Basic Economics by Thomas Sowell (2020).
For the modern, data-driven evidence: Myth and Measurement by David Card & Alan Krueger (Princeton Press; Card won the 2021 Nobel Prize for this work).
The bottom line here is that markets aren’t fragile, they’re adaptive. When workers earn enough to live, they spend more at local stores, stay longer in their jobs, and build stronger communities. A fair market with a living wage doesn’t hurt small businesses, it helps them thrive.
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