Minimum wages increase both wages and employment. But so what? Surely the talk should be about living wages?
Increase in minimum wage decrease employment. As evidenced by the three minimum wage increases the dems enacted in 2007.
Are you referring to the Fair Minimum Wage Act of 2007? That was the only one I know of, and it had the support of 82 Republicans in the House. Only three Republicans in the Senate voted against the final bill, and President Bush signed it. So it was hardly just "the Dems."
Minimum wages aren't a debate. We know that they are welfare enhancing. They at least reduce inefficient wage differentials and, according to the evidence, increase employment and productivity. They can't, however, eliminate working poverty. Thus the need for living wage comment
True; you could hire a lot more people for .25 per hour; thing is whose going to take those jobs? More profitable to collect welfare or commit theft.
Enough of the spam. Monopsony, requiring only wage-making power to create an inefficient wage distribution, is the norm. Efficiency wages also indicates that wages and productivity are endogenous. Both can be used to explain the positive employment effect from minimum wage increases. But so what? The minimum wage just becomes a correction for market failure. We shouldn't exaggerate the welfare effects. The minimum wage is an ineffective poverty alleviation policy. To derive the desired poverty reduction effects the discussion has to shift to living wage discussion (and the means a government can utilise to eliminate low wages)
Given that employers have monposonic power, then a minimum wage would increase employment. It seems intuitively right considering current labour markets with high unemployment. Is there however any empirical support for the assumption?
All we need is imperfect knowledge of job opportunities (I.e. Job search). In terms of empirical evidence we have two approaches: first, confirmation of job search predictions. Second, perhaps of more importance, rejection of the 'law of one wage' (I.e. As predicted, there is no market wage). But that's not the interesting stuff. The interesting stuff is how we can eliminate working poverty. The minimum wage certainly cannot deliver that result
what i think should happen is that 1: minimum wage remains in effect, though it should be related to current money value. 2: i think any full time workers that are not listed as a dependent on somebody elses taxes, the company they work for has to pay them enough money that they won't have to get on welfare. (i list this because according to walmarts website they employ 1.2 million people. and i have noticed that a large amount of their basic employees, such as stockers and cashiers, are on welfare despite the fact that walmart makes a huge amount in profits each year and i assume they could easily afford to pay them a larger amount to keep them off of welfare) 3: we need to lower the amount of hours it takes to be considered working full time. 4: we need to regulate government funded programs such as welfare, food stamps and the free lunch programs at public schools (personally i would like to dissolve that last program) so this is my idea, please keep in mind that this is an opinion, please keep any replies civil and rational.
How would we know the appropriate level of the min wage for correcting for market failure? At some point we would see a decrease in the demand for labour, wouldn't we? So there might be a risk of the whole thing backfiring. Corporatist solutions might be a better way to go, at least we don't have those wonderful £5/h jobs you guys have (yet), and we have our unions to thank for that.
The lower the minimum wage, the less disposable income there is in the pockets of consumers to go to the store and buy stuff. You want customers ? You want sales ? The higher the minimum wage, the more of both of those you get.
You won't be able to understand minimum wage effects through macroeconomic demand management, let's not kid ourselves. The impact of minimum wages on earning power just isn't large enough
This is a rather ridiculous statement that runs contrary to basic economics. No amount of empirical "evidence" can disprove the fact that minimum wages must decrease employment and output.
You obviously don't know your supply & demand. We only need for firms to face upward sloping labour supply (i.e. accept the empirical evidence that rejects the law of one wage). And how is that delivered? Job market frictions are sufficient, as described in detail by the job search models by the likes of Burdett and Mortensen. This isn't a thread for you to advertise labour market error!
I find this an interesting claim. Basic supply and demand states that a price floor will create a surplus of the good in question, be the good labor or anything else. I'm extremely confused. In this very post you talk about "job market friction", I'm assuming that there isn't widespread error in the labor market, but it would appear that you are.
