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November 07, 2006
Before pulling the lever for a min wage hike
Consider this lit review conducted by David Neumark, William Wascher:
- Clearly, no consensus now exists about the overall effects on low-skilled employment of an increase in the minimum wage. However, the oft-stated assertion that this recent research fails to support the traditional view that the minimum wage reduces the employment of low-skilled workers is clearly incorrect. The overwhelming majority of the studies surveyed in this paper give a relatively consistent (although not always statistically significant) indication of negative employment effects of minimum wages. In addition, among the papers we view as providing the most credible evidence, almost all point to negative employment effects. Moreover, the evidence tends to point to disemployment effects of minimum wages in the United States as well as many other countries. Two potentially more important conclusions emerge from our review. First, we see very few - if any - cases where a study provides convincing evidence of positive employment effects of minimum wages, especially from studies that focus on broader groups (rather than a narrow industry) for which the competitive model predicts disemployment effects. Second, when researchers focus on the least-skilled groups most likely to be adversely affected by minimum wages, we regard the evidence as relatively overwhelming that there are stronger disemployment effects for these groups.
More on NBER Working Paper No. 12663 here.
Related: When Unions do the “exploiting”
Posted by tedb at November 7, 2006 10:03 AM
This is bull korn along with any arguments that
minimum wage must raise product costs. Clearly
wage distrubtion across workers could affect costs
but if the primary control is product cost and that
must be lowered or remain steady, then wage tradeoffs
can be made fairly across workers wihtout pricing chnges.
The executive worker at the top of the company pyramid
does not provide more effort to make products or distribute them
than the bottom shop wokers.
A professionla making 200,000 a year or 100/hr
is actually making about 300,000 with benefits.
If this person gave up 5/hr to lower wage workers
they would hardly be worse off economically, dropping
5% while the $5 coud raise any minimum wager worker
$1 - probaly incresing them 20%.
When you look at CEO and other executive comepensation
for people making 300,000 or more, if they moved 30% to the bottom
level workers, this $100,000 could serve to raise 20,000
workers wages by $5 per hour - probably in the range of
20% to 100% wage increases - and certainly 100% compared to
a $5 minimum wage. Twenthy thousand workers impacted by
adjusting one executives pay at no cost or pricing increase.
That seems fair enough.
Comment by: Dr.Carter at January 6, 2007 08:56 AM
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