4 ms·
> However, wages (like all other prices) in a market are set by supply and demand. This should be the case, but minimum wage laws completely screw up the marke
by sparkie 8y ago
> However, wages (like all other prices) in a market are set by supply and demand.
This should be the case, but minimum wage laws completely screw up the market. The unintended consequences of minimum wage result in almost the opposite effect of what they are intended to achieve. They keep wages artificial low, and increases in minimum wage push the costs of all goods and services upwards, as well as cause disemployment.
Wages have been "accidentally" coupled to minimum wage policies which is why there is less correlation with productivity. How this article can be so long and barely mention its effects baffles me.
- mindB 8y agoThe article devotes significant time toe discussing the effect of minimum wage policy under point 8. He makes a convincing argument that it doesn't explain much of the effect.
- sparkie 8y ago"significant time?" The author dismisses it in a single paragraph because of a single chart which shows that stagnation is not only among the lowest earners. Yet the same chart clearly shows that the same level of stagnation is not present among highest earners. Minimum wage laws do not just affect minimum wage earners. They affect everyone. Minimum wage earners are hit the worst, despite the laws being intended to help them. It also affects inflation, which the author posits as the leading cause of stagnation (misprediction of inflation). Minimum wage causes inflation, and the effects of it are unpredictable, because you don't know who is going to raise their prices to make up the additional employment costs, or who is going to lose their jobs because smaller businesses downsize because they can't afford the increased minimum wage costs.