Both BloombergBusinessweek (reporters Peter Coy and Susan Berfield) and the Financial Times
(columnist Edward Luce) are out with pieces supportive of raising the
minimum wage. While I understand the desire to give low-wage workers a
raise, selecting the minimum wage as instrument of choice is a curious.
While critics can be apocalyptic about the economic impact of raising
the minimum wage, basic economics suggests doing so will make it more
expensive for businesses to hire young and low-skill workers.
For instance, a 2013 literature review by David
Neumark, J.M. Ian Salas, and William Wascher concludes “that the
evidence still shows that minimum wages pose a tradeoff of higher wages
for some against job losses for others, and that policymakers need to
bear this tradeoff in mind when making decisions about increasing the
minimum wage.”
And a study in September from Texas A&M economists Jonathan Meer and Jeremy West finds
while raising minimum wage “may not cause an immediate shock to
employment, as is often feared,” it does discourage firms over the
longer-term from hiring.
What’s more, a 2010 study “Will a $9.50 Federal Minimum Wage Really Help the Working Poor?” by
researchers Joseph Sabia and Richard Burkhauser found that a federal
minimum wage increase from $7.25 to $9.50 per hour — higher than the $9
that President Obama has proposed — would raise incomes of only 11% of
workers who live in poor households. Even Coy and Berfield acknowledge
some of the policy’s imperfections, writing that “a higher wage floor
would undoubtedly price some marginal workers out of the market.”
These studies aren’t some secret. So why do so many smart people keep
advocating for a higher minimum wage? The best answer I can come up
with is that they think it is more politically likely than the better
economic answer: wage subsidies.
(Click link below to read more)
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- Judy Chaffee
- This site is the inspiration of a former reporter/photographer for one of New England's largest daily newspapers and for various magazines. The intent is to direct readers to interesting political articles, and we urge you to visit the source sites. Any comments may be noted on site or directed to KarisChaf at gmail.
Wednesday, December 4, 2013
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