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

[Adam Smith]

Originally posted by Flip McWho
Aye, in NZ we have a youth rate which is like a dollar or so less than the adult rate (age 18 being the difference), though both increase when the govt. adjusts the minimum wage.

I have no great problem with that either, as I've said before.

[Flip McWho]

You're still causing economic damage to these businesses which are the primary employers of low-wage labor, and to the consumers who pay higher prices (these consumers comprise most of the population).

Aye as I said earlier business' would probably soak up the minimum wage increase by upping prices slightly which would hurt the lower waged workers anyways.

[Flip McWho]

I have no great problem with that either, as I've said before.

Yeah, I've followed these threads before, though not indepthly. It's currently quite a bit of a debate in NZ, claims of discrimination against the youth are being thrown around.

[Edan]

IIRC, there were very few Americans actually making minimum wage (as opposed to making less than minimum wage) and many of those were part time workers. So I don't forsee that much effect one way or another. But what do I know?

[DAVOUT]

Originally posted by Maniac


Eg a waitress in some restaurant. I haven't yet heard of robots that can do the job, so even if the wage is increased, they'll still need to hire the same number of people?

Inelastic demand I guess that would be called.

You only forget that some existing restaurants will be closed because the rise in minimum wages makes them not profitable enough, and new restaurants will not be opened for the same reason. The demand to be referred to is not the demand of lunches but the demand of workers by restaurants owners.

[DAVOUT]

One of the negative consequences of a policy increasing systematically, every year, the minimum wage, in excess of the inflation rate, which is done here since the sixties, is that workers previously paid above the minimum become minimum salary workers. Right now, around 12% of the work force are paid the minimum wage. These people have no longer any motivation since they can hardly expect an individual salary rise. And this has created a population that expect their income progress not from their work but from politicals who get elected because they promise to grant generous increases of the minimum wage.

[DAVOUT]

This is aggravated when the government gives social charges reduction for minimum wages. This make impossible individual salary rise because a 10% promotion would cost much more.

[Sandman]

From Landsberg , whoever he is:

Ordinarily, when we decide to transfer income to some group or another—whether it be the working poor, the unemployed, the victims of a flood, or the stockholders of American Airlines—we pay for the transfer out of general tax revenue. That has two advantages: It spreads the burden across all taxpayers, and it makes politicians accountable for their actions. It's easy to look up exactly how much the government gave American, and it's easy to look up exactly which senators voted for it.

Those 'advantages' are pitiful. Spreading the burden across all taxpayers is not as fair as it sounds - the super rich and large corporations can often escape paying their fair share. And of course, it's perfectly easy to see who voted for the minimum wage.

[Sikander]

Originally posted by Edan
IIRC, there were very few Americans actually making minimum wage (as opposed to making less than minimum wage) and many of those were part time workers. So I don't forsee that much effect one way or another. But what do I know?

There is a ratcheting effect whereby people who were making more than minimum (due to greater skills, harder work or a higher status job) will have their wages increased as well, or their employers will see them choose easier jobs that now pay the same amount. Davout's post shows the outcome of this effect when it has become completely institutionalized.

[Colon™]

Originally posted by DAVOUT


You only forget that some existing restaurants will be closed because the rise in minimum wages makes them not profitable enough, and new restaurants will not be opened for the same reason. The demand to be referred to is not the demand of lunches but the demand of workers by restaurants owners.

Or the restaurant-owner will simply ignore the law all-together and employ personnel illegally. I'm surprised that a Belgian like Maniac doesn't think of that.

[Kuciwalker]

Those 'advantages' are pitiful. Spreading the burden across all taxpayers is not as fair as it sounds - the super rich and large corporations can often escape paying their fair share. And of course, it's perfectly easy to see who voted for the minimum wage.

as opposed to the massive unfairness - and more importantly, economic distortion - of targetting a select class of businesses?

[flash9286]

Originally posted by Adam Smith
ES-202 is an area census. IIRC Murphy and Welch went back and got the actual time cards from the establishments Card and Kreuger surveyed. That's a direct test of Card and Kreuger's survey result.

Also, ES-202 reports number of persons employed but not hours worked. If adjustments take place on the intensive margin (i.e., number of people employed stays the same, but hours of work falls), as seems likely if there are explicit or implicit hiring costs, then ES-202 data would not pick up the adjustment.

I thought M-W used CPS.

[Edan]

Originally posted by DAVOUT
Right now, around 12% of the work force are paid the minimum wage.

Some statistics

Of workers paid hourly, 2.5% (ro about 1.9 million) make minimum wage or below, with .6% (or about 479,000) making minimum wage.

Edit: slightly newer numbers.

[snoopy369]

Perhaps he's talking about French minimum wage?

Anyway, that issue illustrates an interesting problem (that my company could face) with raising the min wage up to 7.25 or so. That on top of the "big box" wage here in chicago that would require Target/HomeDepot/etc. to pay $10/hr to their employees; doesn't affect us directly, but what both laws would do would be to decrease the incentive for more skilled people to work for my company: higher pay.
We pay somewhat over the illinois minimum wage, as an initial rate, and then have some flexibility over that based on experience. A significant increase in the minimum wage would likely cause us to have to pay minimum wage, rather than somewhat above that wage, for our initial hires, and in addition could limit our ability to pay more to those with experience [as we'd have to worry about payroll]. That really sucks for us, because while we wouldn't be forced to raise our wages by a new min wage, we would be put in a quandry - either raise them anyway, to stay competitive vs other retailers, but hurt our payroll even more... or lose our competitive edge in getting new employees.

[Edan]

Originally posted by snoopy369
Perhaps he's talking about French minimum wage?

Oh. Oops.