Disspelling Minimum Wage Myth.

Wait, wait, which of these scenarios are we going for?



a) You get welfare or you work. Minimum wage drops to be barely over welfare payments, just enough to entice some people to work. (e.g. Welfare is $20/day. Min wage is $3/hour, enough that working is a little better than welfare, plus hey, you might get promoted or something)

b) Everyone below a certain income (poverty line) is paid welfare. This gives everyone a bare minimum with which to participate in most of American society, and gives their kids a chance to grow up somewhat healthy and schooled if the parents aren't crack-whores. But then, minimum wage can float, and people can work to keep a bit more money than welfare. Minimum wage drops until it is barely worth people's time to go to work. (e.g. Everyone gets at least $20/day, min wage is $1.5/hour on top of that to get people off the couch)

c) You cancel welfare & etc. and let minimum wage float. Pay becomes just enough to make work hours more productive than other activities you might try to stay alive (e.g. crime, begging). Or just barely enough to get the creame de le poor-masses crop, if your business happens to need that.

Originally Posted by Bradylama

Wage caps sort of eliminate the whole profit motive. Establishing a wage cap is like telling the most productive members of society that they should only produce so much. Why bother making more money just to have it seized and redistributed to jerks you don't know?

Rather than monster pay, couldn't you give business people preferential terms in buying their own shares, instead of exorbitant salaries? The push to do better would still exist. Similar deals could be worked out for sports athletes, doctors in private hospitals.

...wouldn't work for the largest of the private firms though. And the doctors thing might cause free riders. And financial workers would still be able to make money at insane rates.

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I could've sworn my econ text said that labour demand was pretty insensitive to the minimum wage, so a lot of economists supported keeping one. And then this pops up on CNN.

But economists don't generally forecast a major impact on any sector. "Whatever the effect is, it's not very large," said David Gleicher, a labor economics expert at Adelphi University. "First of all, minimum wage workers are a very small percentage of the whole labor force. ... It's almost impossible for it to have a major effect."

Primarily, repercussions from raising the minimum wage occur among younger workers, according to Gleicher. Many of those teens and college-age workers belong in a class Gleicher called "target earners" who have a certain amount of money they wish to make, such as for college expenses or a car payment. Once they reach their target, the incentive to work decreases, creating the possibility that a higher minimum wage could lead to somewhat lower productivity and employment.

Mostly, Gleicher joins others who view the minimum wage in its current context as far more a political issue than an economic one.

Plus those Crazy Canucks agree (thx, Google news).



So yeah, it costs a few jobs, with the noisy data hard to say how much. But it's an administratively simple way to help the people good enough to still get jobs. Whatever. There's bigger things to worry about. Unfortunately, it's probably not going to be enough swell the ranks of the military.

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