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The main argument against the minimum wage is that it may increase unemployment for unskilled workers. However, recent empirical work suggests that the minimum
by cjy 14y ago
The main argument against the minimum wage is that it may increase unemployment for unskilled workers. However, recent empirical work suggests that the minimum wage is currently low enough in the U.S. that raising it has quite a small effect on unemployment. Therefore, some economists feel the redistribution effects are worth a small cost in efficiency. Here is a survey of prominent economists on the effects of raising the minimum wage to $9:
http://www.igmchicago.org/igm-economic-experts-panel/poll-results?SurveyID=SV_br0IEq5a9E77NMV http://www.igmchicago.org/igm-economic-experts-panel/poll-re...
Many economists would argue that increasing the EITC would be a better way to help the poor.
- seanmcdirmid 14y agoBut the libertarians don't see it like that. If we give poor people $9, they'll want $25, $100, and then $1000/hour. There is no point in arguing a rise to $9/hour, so use straw man to make the argument against stronger! I like min wage increases vs EITC. A min wage increase pushes up the value of human labor, giving more incentive to innovate and automate, which is where we should be heading anyways. It's actually a hard love approach.
- emiliobumachar 14y agoRemember there's always that cozy alternative to innovate and automate: not starting that business after all.
- seanmcdirmid 14y agoFortunately we aren't like that. But we still need the pressure valve on at the low end to force us all up the value chain. It's like raising water rates to make you use water more efficiently, do you stop using it? No, you are smarter about how you use it. Human labor is the same thing. I've seen what happens when the bottom is too low...it's not much better than slavery or serfdom.
- Evbn 14y agoThe problem with EITC (and Medicaid) is that it subsidizes employers like Walmart.