What do you think would happen in a country like Brazil or Mexico if they raised their minimum wage to a level comparable with that in the U.S. or the U.K. ? (Keeping in mind many estimate the real rate of unemployment in Mexico to be close to 15%) A minimum wage can help more evenly distribute income in an economy, and thereby increase the amount of consumer spending, but a minimum wage can also lead to unemployment, which of course has the opposite effect. It depends on the situation and the shape of the supply-demand curve. Typically, a minimum wage is more likely to be successful if the unemployment rate is already low (and the labor force participation rate is not low either). Another issue, with more social implications, a minimum wage can also displace more vulnerable groups from the workforce, like teenagers, the elderly, workers with disabilities, as employers find it is not worth hiring them at said wage. But this rests on the assumption that these workers have not already been displaced from the labor force by an excess supply of other poor people seeking jobs in the labor pool.
You show inconsistency here. If firms face an upward sloping labour curve then we'd expect a higher equilibrium unemployment rate and the minimum wage to actually reduce it. Given minimum wages typically only reduce underpayment, the reference to vulnerable groups makes no logical sense. What we do have are particular socio-economic groups with higher risks of working poverty. However, that reflects discriminatory practices.
I meant the demand curve, of course. Though I made reference to things pertaining to the supply curve because, if you know where the current wage levels are at, you can make inferences about the nature of what the greater demand curve looks like by looking at the supply curve, if that makes sense. The demand curve might not be able to sustain quantity if the price is increased. Then again, it might be able to. Depends on the nature of the economy. I was just saying that typically, when the unemployment rate is already high, it's an indication that the economy won't be able to sustain the number of jobs if the wage price is raised. It means that many of those low level jobs that exist are already precarious and that employers would be likely to fire those workers if the costs went up. It does if they're no longer employed. So you want to create a law that employers will not be allowed to discriminate against workers with mental and physical disabilities? Yeah, how successful do you think that will be? There's all sorts of categories of "less desirable" workers, and you can't just make it all go away by just hoping employers won't discriminate. That's naive communist-type reasoning right there. Here's my opinion on the matter: You're not going to be able to solve the problem without addressing the underlying issue of supply and/or demand. (supply = cut the number of people in the labor force somehow so there's fewer people looking for jobs; demand = move more money that's not going towards consumption into creating jobs) Hoping minimum wage increases will automatically result in an increase in demand is naive at best, without examining the wider circumstances and nature of the economy / labor market.
No it doesn't. Your argument requires a perfectly elastic labour supply curve. If there isn't one, the firm has monopsonistic power. We know of course that's the norm. Job search analysis proved some time ago that labour market frictions increase both the equilibrium unemployment rate and generate an inefficiently low wage. Isn't it ironic that right wingers argue against the minimum wage when, by definition, it goes hand in hand with economic efficiency? So your argument is that inefficiency discriminatory practices cannot be removed in capitalism? Golly!
My argument wasn't that these discriminatory practices were inefficient. Some workers are simply worth less. When you create a wage floor that's at a fairly high level, there is no longer any incentive for employers to hire workers of less value, not when there's plenty of "normal" ones applying.
Discrimination is the norm. That refers to racial, gender, sexual, age, disability etc etc etc. And that's easy to test. Just run a wage regression and undertake an Oaxaca decomposition. Your stance is innocent on two counts. First, wage floors reduce underpayment. There is no need to change hiring practices. Second, discrimination is quite distinct from minimum wage analysis. Its a different aspect of inefficiency.
Provide one credible economic source in support of that statement. Please give author(s), title and journal. Evidence overall suggests insignificant or positive employment effects from minimum wages. Doucouliagos and Stanley's (2009, Publication Selection Bias in Minimum Wage Research? A Meta-Regression Analysis, British Journal of Industrial Relations, Vol. 47, no. 2, pp. 406-42 meta-analysis concludes that results "corroborate [Card and Krueger’s] overall finding of an insignificant employment effect". Wolfson and Belman (2014, What does the minimum wage do?) find that, if only latter studies are considered (27 studies since 2000), positive employment effects are found.
Norway, Denmark, Sweden, Iceland, Switzerland, Austria, and until 3 years ago Germany. Countries that don't have a minimum wage.
You've not provided anything. It was a simple request: provide an economic source in support of your view.
And how are you using that? That says 'unions can have significant effects'. I can agree with that of course. Nothing in support of your argument mind you.
When government isn't involved, the free market is. Unions do a much better job at boosting wages than a minimum wage
Not really. Minimum wage jobs don't tend to be unionised. You could refer to something like an incomes policy, with government policy and collective bargaining ultimately working hand in hand. However, what's the point? Better to have a fluid minimum wages that protect workers and then use collective bargaining to create sensible wage distributions and ensure "voice" productivity effects.
