So I was walking to work the other day when a man approached me...

[Space05us]

... asking if I would sign a petition to raise the minimum wage for the state of New Mexico to $7.50 from $5.15 (federal min. wage). Unfortunatly/fortunatly Im not a registered voter in this state yet so I couldnt sign.

As I kept walking I wondered what would be the impact upon the state economy if the minimum wage was raised so high? Alaska's minimum wage is $7.15 and cost of living is a hell of a lot higher.

What do you guys think?

[Dis]

Re: So I was walking to work the other day when a man approached me...

Originally posted by Space05us
... asking if I would sign a petition to raise the minimum wage for the state of New Mexico to $7.50 from $5.15 (federal min. wage). Unfortunatly/fortunatly Im not a registered voter in this state yet so I couldnt sign.

As I kept walking I wondered what would be the impact upon the state economy if the minimum wage was raised so high? Alaska's minimum wage is $7.15 and cost of living is a hell of a lot higher.

What do you guys think?

we are raising the minimum wage in our state. In fact, it started as a petition, then we had a vote in 2004. But we have to do another vote in 2006 for it to take effect. But politicians are trying to raise it before then. so I can't say what the effects are, but we'll see.

everyone always says it leads to unemployment, but it looks to me like good economic times follow rises in minimum wage.

[Ted Striker]

In my opinion it can only be a good thing. It does undercut net profits for business, but will redistribute more wealth among the lower classes.


Reactionaries will tell you that the sky is falling and that businesses won't hire as many workers as they did before. They will tell you that business won't have as much money to reinvest into themselves to create more jobs. But I don't think that's the case, especially among the big corporations, where the extra cash just goes into stockholders bank accounts and upper level executives salaries and stock options anyway.

Where it would hurt the most is small business, and this is often cited in sound byte news reports. But those businesses will adjust.

[Space05us]

What about cost of living? Would the raise in minimum wage be followed by a raise in rent, utilities, food?

[MichaeltheGreat]

It depends on how much the costs (or perceived costs) of the item in question are impacted by low wage in-state labor and what the market will bear.

A lot of fast food and retail places pay above minimum anyway, at least in California, where state minimum is $6.75 and the going rate for entry level fast-food/Starbucks type work is around $8.00

The overall impact is pretty minimal over time.

[Ted Striker]

[DanS]

The minimum wage's impact is based mostly on how high it is versus the market wage.

$7.15 may not be above the lowest market wage for unskilled labor, and, if so, you have to ask yourself why a minimum wage is needed at all.

If the minimum wage is well above the lowest market wage for unskilled labor then you get unemployment for some unskilled labor, as employers make do without extra hands. In turn, the unemployment distorts the market wages downward for those unskilled workers who have jobs.

[Jon Miller]

Oregon's is above 7.15, and it is a lot cheaper to live there than Maryland, or Minnesota

Jon Miller

[Solver]

The minimal wage here is 143 USD. Per month .

[Donegeal]

End result is higher inflation.

Who wants that?

[Agathon]

It would be a good move for vendors of crap like McDonalds. It would mean that poor people, who live off their ****, would have more money to spend on it.

[Urban Ranger]

Originally posted by Donegeal
End result is higher inflation.

Not necessarily, because it simply is a redistribution of a company's earnings.

[Skanky Burns]

Which no company likes, hence there are fewer jobs offered for that rate of pay.

[Adam Smith]

Originally posted by Urban Ranger Not necessarily, because it simply is a redistribution of a company's earnings.

You need to get your economics straight, UR. The result is mainly a redistribution from consumers (some of whom are low wage workers) to low wage workers. But you still get low wage workers pushed out of the market, since companies are unwilling to hire the low wage / low skill workers a the higher wage. Any good economist would know that much. Empirical studies indicate that, all else equal, a ten percent rise in the minimum wage (after adjusting for inflation) reduces employment by about three percent. Net result is that raising the minimum wage increases prices, and decreases employment ... not such a good deal. A far better policy would be to have negative income tax for low wage workers, which increases employment, with little or no effect on prices.

[Shi Huangdi]

Any good economist would know that much. Empirical studies indicate that, all else equal, a ten percent rise in the minimum wage (after adjusting for inflation) reduces employment by about three percent. Net result is that raising the minimum wage increases prices, and decreases employment ... not such a good deal.

So has Card and Krueger's study on this been discredited or fallen out of favor with economists?