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“all economic theories imply that minimum wages should be decided at the state and local level” Nonsense. That’s exactly how you subsidize labor exploitation in poor regions. Which is borne out by the history. https://marginalrevolution.com/marginalrevolution/2021/01/federal-minimum-wage-of-15.html
This argument is the exact same one that was made by Southern politicians in lobbying for regionally-differentiated minimum wage standards when the Fair Labor Standards Act was debated
The claim they made was pretty much the same as Tyler’s. The region was poorer, cost of living lower, workers less productive, it was unfair etc. Southern firms couldn’t afford the higher wages. But in the end National standards were set much higher than typical Southern wages
Did this lead to the collapse of Southern manufacturing? Of course not! It was proceeded by the biggest period of economic growth in Southern history. As Gavin Wright shows, the minimum wage was critical in spurring the growth
The FLSA didn’t kill Southern manufacturing. But it *did* make the status quo mode of low wage, low-skill production based on labor exploitation unsustainable. So what did Southern firms do? They adjusted!
They embarked on a sustained effort to attract northern capital and invested in making the south more livable to attest workers. Invested in education. Research. Basically, the moves toward a pro-growth mindset.
It didn’t change overnight, and not all the problems went away in the South. And certainly these gains went disproportionately to white southerners. But the South adjusted. It grew. It became more competitive nationally
The key thing to realize economically is that the mode of production is not fixed. Labor exploitation is a political choice. The minimum wage can be a powerful tool to put pressure on exploiters fo build an inclusive economy. This is even more important in poor regions
