2 ms·
> Not really, because there could be some other common factor that explains the difference and more than offsets the effect of absence of a minimum wage. Ok, l
by rcme 4y ago
> Not really, because there could be some other common factor that explains the difference and more than offsets the effect of absence of a minimum wage.
Ok, let's assume this is true. What is the argument that we should continue to focus on minimum wage rather than trying to pursue these "other common factors"?
Personally, I think the minimum wage approach has a number of problems. In addition to the evidence presented above, which shows that many countries have strong labor without a minimum wage, the minimum wage fails to pass even a basic logical test.
For instance, let's say we increase the minimum wage. In the best case, ignoring second order effects to demand, employment either stays the same or decreases due to the increased cost of labor. If unemployment decreases at all, labor overall is weaker, as higher unemployment favors the capital owning class. So the only way a higher minimum wage makes sense is if the second order effects of paying people more induce enough demand to lower unemployment. It just seems unlikely to me that we could magically induce demand in this way. The CBO seems to agree with this overall assessment. They estimate the impact of minimum wage increases on unemployment to be purely detrimental: https://www.cbo.gov/publication/55681 https://www.cbo.gov/publication/55681
Since you seem to support a higher minimum wage, I'd be curious to hear your thoughts on the specific mechanisms is which a higher minimum wage would increase the leverage that labor has with the owners.