Economists: Raising the minimum wage might actually be good after all.

[Maniac]

Originally posted by Drogue

Listen to this man! (except on EU-related matters)

As for the general argument, targetted minimum wages in areas of huge monopsony power can work. If in an area you see one employer being the main employer for minimum wage jobs, raising it could see them employ more people, as they don't have to curtail the supply of jobs to keep wages down.

Can you give a concrete example of a sector where this is the case, or is it just theoretical?

[Flubber]

Originally posted by notyoueither


Have you taken into account people who are not employable at a higher wage?

They'll simply have jobs go poof because the 'businesses' that employ them are unable to pay the higher rate.

So they'll stay at home and go on welfare. I'll bet they'll feel better.

How is anything you said here relevant to the Calgary situation? While I am sure that some potential jobs have disappeared in the Calgary marketplace due to the higher wages, its essentially irrelevant since the labour SUPPLY is insufficient to meet the demand anyhow.

So I'm not sure who is staying home on welfare because of a labour shortage . ..

Now if a higher minimum wage was mandated all across Canada based on the labour situations in Alberta, I could imagine the impacts you mention

[Kuciwalker]

Originally posted by Drogue
No it wouldn't. Forcing the minimum wage to be, say, $30 an hour would mean most people would earn exactly the same - great equality.

No, it just means that a lot of people would make a lot more money and a lot of people would make no money because they wouldn't have a job. Elasticity aside, a $30 minimum wage is going to cause a lot of unemployment.

However doing the same by any form of tax would still leave differences. Moreover there's a tradeoff between administration costs of EITCs and inefficiency costs of the minimum wage.

The EITC could be administered the same way income tax refunds are administered now. It's nothing compared to the economic distortion and underutilization of labor caused by a higher minimum wage.

As for the general argument, targetted minimum wages in areas of huge monopsony power can work. If in an area you see one employer being the main employer for minimum wage jobs, raising it could see them employ more people, as they don't have to curtail the supply of jobs to keep wages down.

For what company is that the case across the entire United States?

[notyoueither]

Originally posted by Flubber



How is anything you said here relevant to the Calgary situation? While I am sure that some potential jobs have disappeared in the Calgary marketplace due to the higher wages, its essentially irrelevant since the labour SUPPLY is insufficient to meet the demand anyhow.

So I'm not sure who is staying home on welfare because of a labour shortage . ..

Now if a higher minimum wage was mandated all across Canada based on the labour situations in Alberta, I could imagine the impacts you mention

In that post I am thinking about projects to create employment opportunities for people with disabilities.

These are not Fortune 500 companies, and they never will be. They are enterprises intended to give opportunities to people who could never get a job in a normal, profit oriented business. These sorts of projects tend to be run by charities. Even in Calgary you have those, no?

[notyoueither]

And then there are people of lower ability, although not considered disabled.

You get someone who is far short of not too bright, and is not capable of a day's work in a manual labour field.

Increasing the minimum wage may very well force that person out of the work force as employers are more reluctant to pay higher rates to a person of very limited ability. Shortage or no, Tim Hortons won't pay someone who has a hard time counting.

[Dinner]

Drogue is right on with the political side of things as always.

[Sandman]

Originally posted by Kuciwalker
It's society's obligation, society ought to pay. We shouldn't bite the hand that's feeding them. And the taxpayer paying is more economically efficient - so better off for everyone in the long run.

It's not more efficient. Tax credits require bureaucracy, paperwork and have a habit of going uncollected. And they can be easily be defrauded as well - just work on the sly.

That's not even worth responding to

Because you can't.

[Colonâ„¢]

Lots of them? Eg in this thread...

wage moderation => less inflation, more competitive towards other countries, more consumption
<=>
wage moderation => less purchasing power, lower prices, less consumption

In other words, it all depends IMO.

The only economist I've seen in this thread so far is Adam Smith and he's not arguing that "low" wages (as if there's such a thing irrespective of context) are a good thing for the economy per se. He is arguing that the market should be given free reign in setting wages.

Wage moderation imposed from top-down (as is the case in Belgium) isn't the free market at work, nor even good economics. I'm sure employer's organizations such as the VBO like to pretend otherwise, but what do you expect.

[Kuciwalker]

Originally posted by Sandman
It's not more efficient. Tax credits require bureaucracy, paperwork and have a habit of going uncollected. And they can be easily be defrauded as well - just work on the sly.

It's more economically efficient. The administrative costs are outweighed by the economic gains, especially since the administration is already set up.

[Az]

Originally posted by Colonâ„¢
Heh, funny. From the article in the OP:

quote:
Today, that consensus is eroding, and a vigorous debate has developed as some argue that boosting the wage would pull millions out of poverty.

From the Wall Street Journal:

There's a virtual consensus among economists that the minimum wage is an idea whose time has passed.

Ok, which of the 2 is it?

It's not contradictory but complimentary:

There is a virtual consensus among economists that pulling millions out of poverty is an idea whose time has passed.

[Flubber]

Originally posted by notyoueither


In that post I am thinking about projects to create employment opportunities for people with disabilities.

These are not Fortune 500 companies, and they never will be. They are enterprises intended to give opportunities to people who could never get a job in a normal, profit oriented business. These sorts of projects tend to be run by charities. Even in Calgary you have those, no?

LOts and lots of charity in Calagary.

The increase in market wages would have no impact at all on the ability of an employer to pay a severely disabled person the minimum wage as a form of charity (if they were capable of no or very little work) if that is what they chose to do. I would think that most mildly disabled people could garner a market wage.