# Economics-minimum wage **URL:** \ **Category:** Great Debates\ **Created:** [October 16, 2011, 12:40am UTC](https://boards.straightdope.com/t/economics-minimum-wage/599788 "2011-10-16T00:40:48Z")\ **Posts on this page:** 20\ **Page:** 4
**Author:** ![The\_Tao\_s\_Revenge](https://avatars.discourse-cdn.com/v4/letter/t/73ab20/32.png) [@The\_Tao\_s\_Revenge](https://boards.straightdope.com/u/The_Tao_s_Revenge)\ **Post date:** [October 19, 2011, 11:53am UTC](https://boards.straightdope.com/t/economics-minimum-wage/599788/61 "2011-10-19T11:53:56Z")
Also aren’t economists saying we need some inflation right now? If it causes inflation then why not set it higher? Seems like those who claim inflation and want the economy to do well ought to be championing a minimum wage increase. ---
**Author:** ![Lemur866](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lemur866/32/434_2.png) [@Lemur866](https://boards.straightdope.com/u/Lemur866)\ **Post date:** [October 19, 2011, 1:07pm UTC](https://boards.straightdope.com/t/economics-minimum-wage/599788/62 "2011-10-19T13:07:05Z")
Raising the minumum wage will have no effect on inflation. The concern is that raising the minumum wage will increase unemployment. Employers wil eliminate a few marginal jobs rather than give their employees a raise. There’s no point in talking about whether we should abolish the minumum wage or not, because that’s not going to happen. But where should the minumum wage be set? Should we leave it where it is, because somehow we’ve stumbled upon the exact optimum minimum wage? Raise it? Lower it? It seems to me that with low steady inflation over the years, there’s not much need to lower the minumum wage ever, since keeping it at the same nominal level really lowers it slightly by a few % every year. And when we map minumum wage vs inflation, we can see that the minumum wage is currently lower than it has been in the past. OK, so abolishing the minumum wage is off the table. So is lowering it. Maybe we should keep it exactly the same, because it’s perfect right where it is? Or should we raise it a couple of nickels? Or raise it a lot? If the minumum wage is so helpful to low-income workers, why not raise it a lot? ---
**Author:** ![smiling\_bandit](https://avatars.discourse-cdn.com/v4/letter/s/e9a140/32.png) [@smiling\_bandit](https://boards.straightdope.com/u/smiling_bandit)\ **Post date:** [October 19, 2011, 1:26pm UTC](https://boards.straightdope.com/t/economics-minimum-wage/599788/63 "2011-10-19T13:26:40Z")
Since several people asked for research (not that they bothered to do even elementary checking on their own), I will simply point to wikipedia’s page, which has a reasonable if incomplete rundown. Among many things, almost the only survey showing benefits to the Minimum Wage was Card and Krueger study, which was conducted in a very unrigorous manner and later shown to be false by more thorough investigation. Their belief that that studies are biased towards anti-min-wage side may have more merit, but they have still not shown significant benefit from the minimum wage. ---
**Author:** ![Cheesesteak](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/cheesesteak/32/3694_2.png) [@Cheesesteak](https://boards.straightdope.com/u/Cheesesteak)\ **Post date:** [October 19, 2011, 1:33pm UTC](https://boards.straightdope.com/t/economics-minimum-wage/599788/64 "2011-10-19T13:33:41Z")
> [@Lemur866](#): > > Raising the minumum wage will have no effect on inflation. The concern is that raising the minumum wage will increase unemployment. Employers wil eliminate a few marginal jobs rather than give their employees a raise. > > OK, so abolishing the minumum wage is off the table. So is lowering it. Maybe we should keep it exactly the same, because it’s perfect right where it is? Or should we raise it a couple of nickels? Or raise it a lot? If the minumum wage is so helpful to low-income workers, why not raise it a lot? It’s kind of like a pricing problem. Higher prices = higher profit per unit X fewer units sold Lower prices = lower profit per unit X more units sold Higher min wage = higher wages per person & fewer people employed Lower min wage = lower wages per person & more people employed The trick is to strike a balance. Having more people employed isn’t necessarily better if all of their wages are so low that they can’t get by. Having higher wages isn’t necessarily better if it results in a large swath of unemployment. While there are a small number of people getting minimum wage today, somewhat more are getting “min wage +$x”. Those jobs would be indirectly affected by changes in the min wage, as the market adjusts to the new rate. ---
**Author:** ![smiling\_bandit](https://avatars.discourse-cdn.com/v4/letter/s/e9a140/32.png) [@smiling\_bandit](https://boards.straightdope.com/u/smiling_bandit)\ **Post date:** [October 19, 2011, 1:46pm UTC](https://boards.straightdope.com/t/economics-minimum-wage/599788/65 "2011-10-19T13:46:29Z")
> [@Cheesesteak](#): > > The trick is to strike a balance. Having more people employed isn’t necessarily better if all of their wages are so low that they can’t get by. Having higher wages isn’t necessarily better if it results in a large swath of unemployment. Well, that all depends on whether those jobs are worth it to the people who have them. it might not be great for 40-year olds doing unskilled labor… but it might be fantastic to teens who want to work and earn money. Nor is it obvious to me that the former ought to take precedence over the latter. Teenage workers have valuable labor, and if working is worthwhile to them, I am generally in favor of letting them do just that, learn skills, and so forth. My basic point the is that some jobs are really easy to do, if sometimes unpleasant, and you will never really get a “living wage” doing them. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [October 19, 2011, 4:22pm UTC](https://boards.straightdope.com/t/economics-minimum-wage/599788/66 "2011-10-19T16:22:48Z")
> [@Cheesesteak](#): > > It’s kind of like a pricing problem. > > Higher prices = higher profit per unit X fewer units sold > Lower prices = lower profit per unit X more units sold > > Higher min wage = higher wages per person & fewer people employed > Lower min wage = lower wages per person & more people employed > > The trick is to strike a balance. Having more people employed isn’t necessarily better if all of their wages are so low that they can’t get by. Having higher wages isn’t necessarily better if it results in a large swath of unemployment. > > While there are a small number of people getting minimum wage today, somewhat more are getting “min wage +$x”. Those jobs would be indirectly affected by changes in the min wage, as the market adjusts to the new rate. Simple world you inhabit. Corporations profits are at an all time high, they could absorb an increase in minimum wage with no trouble. They don’t want to of course. Studies have shown that an increase in minimum wage has not resulted in increasing unemployment. The argument is false. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [October 19, 2011, 8:44pm UTC](https://boards.straightdope.com/t/economics-minimum-wage/599788/67 "2011-10-19T20:44:33Z")
> [@msmith537](#): > > …clearly we can’t just set minimum wage to $100k a year. Most companies would either not be able to afford to hire any workers or they would need to sell their products for so high a price, that a $100k a year would seem like current minimum wage in purchasing power. So obviously there is some level at which increasing minimum wage has a detrimental effect on the economy. If done slowly enough you could create wage driven inflation which would severely reduce wealth disparity by the time minumum wage was set at $100K/hour especially if we taxed investment income more heavily. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [October 19, 2011, 8:46pm UTC](https://boards.straightdope.com/t/economics-minimum-wage/599788/68 "2011-10-19T20:46:26Z")
> [@jtgain](#): > > You learn the first day in Econ 101 that things like Rent Control and Minimum Wage are bad and that Free Trade is good. Yet there is still argument about these things. Perhaps you needed to extend your economic education beyond first semester economics. judging from what you have written in the apst it doesn’t seem like you have advanced to econ 102 (macro). ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [October 19, 2011, 8:53pm UTC](https://boards.straightdope.com/t/economics-minimum-wage/599788/69 "2011-10-19T20:53:58Z")
> [@tomndebb](#): > > Rent control is bad. > Free Trade is, with some adjustments, good. For the record I am vehemently against rent control. Having lived in NYC most of my life, I don’t think anyone has a “right” to live in Manhattan regardless of their ability to pay. Education, sure; some basic level of health care, yes; a loft in Soho? WTF!!! > [@](#): > > The closest one might come to such an event was the organization of migrant farm workers and the reality was that after they finally got better living conditions, produce prices did not follow the minimum wage curve. The inflation of those prices matched the rest of the inflationary economy of the 1970s. (As with most industries, there were so many people harvesting produce who were not affected by those rules, that there was a typical supply/demand limit on prices.) produce prices correlated more closely with the price of oil than it did with the price of migrant labor. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [October 19, 2011, 8:56pm UTC](https://boards.straightdope.com/t/economics-minimum-wage/599788/70 "2011-10-19T20:56:20Z")
> [@smiling\_bandit](#): > > I rather strenuously doubt the connection. The big problems with a minimum wage are: > (A) I see little evidence that it raises the actual market clearing price of few of the jobs available for adults > (B) That is hurts employment that the young, who might benefit from experience. > (C) It raises costs and prices without actually imrpoving the bottom line for most people. There is only so much elasticity in the demand for labor. ---
**Author:** ![Cheesesteak](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/cheesesteak/32/3694_2.png) [@Cheesesteak](https://boards.straightdope.com/u/Cheesesteak)\ **Post date:** [October 19, 2011, 9:45pm UTC](https://boards.straightdope.com/t/economics-minimum-wage/599788/71 "2011-10-19T21:45:08Z")
> [@gonzomax](#): > > Simple world you inhabit. F=MA E=MC[sup]2[/sup] Sometimes concepts are simple, and the execution tricky. > [@](#): > > Corporations profits are at an all time high, they could absorb an increase in minimum wage with no trouble. They don’t want to of course. This is the problem, isn’t it? You can’t make a corporation hire someone, they have to want to, if they don’t want to, the person stays unemployed. > [@](#): > > Studies have shown that an increase in minimum wage has not resulted in increasing unemployment. The argument is false. Even so, all it means is that real increases in minimum wage that have already happened have not shown a noticeable change in unemployment rates. This is a good thing to know because we have generally taken modest changes to the minimum wage, and they have not unduly affected the economy. Take a BIG change, maybe that doesn’t stay true anymore. That is where a simple concept becomes tricky in the execution. What is too big a change, when are wages too low, when are they too high? This is where you are going too simplistic in saying that corporations can afford it, and it won’t affect unemployment. ---
**Author:** ![smiling\_bandit](https://avatars.discourse-cdn.com/v4/letter/s/e9a140/32.png) [@smiling\_bandit](https://boards.straightdope.com/u/smiling_bandit)\ **Post date:** [October 19, 2011, 10:11pm UTC](https://boards.straightdope.com/t/economics-minimum-wage/599788/72 "2011-10-19T22:11:00Z")
> [@Damuri\_Ajashi](#): > > There is only so much elasticity in the demand for labor. True, but arbitrary cut offs are rarely useful in dealing with elasticity. ---
**Author:** ![msmith537](https://avatars.discourse-cdn.com/v4/letter/m/d9b06d/32.png) [@msmith537](https://boards.straightdope.com/u/msmith537)\ **Post date:** [October 20, 2011, 2:41am UTC](https://boards.straightdope.com/t/economics-minimum-wage/599788/73 "2011-10-20T02:41:38Z")
> [@gonzomax](#): > > Simple world you inhabit. Corporations profits are at an all time high, they could absorb an increase in minimum wage with no trouble. They don’t want to of course. > Studies have shown that an increase in minimum wage has not resulted in increasing unemployment. The argument is false. Minimum wage essentially amounts to a subsidy for Raman noodle makers, malt liquor companies and OTB gambling. ---
**Author:** ![Lemur866](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lemur866/32/434_2.png) [@Lemur866](https://boards.straightdope.com/u/Lemur866)\ **Post date:** [October 20, 2011, 3:14am UTC](https://boards.straightdope.com/t/economics-minimum-wage/599788/74 "2011-10-20T03:14:14Z")
> [@Damuri\_Ajashi](#): > > produce prices correlated more closely with the price of oil than it did with the price of migrant labor. Migrant farm workers don’t make minumum wage. They invariably get paid by the piece. You get $X for every undamaged unit of Y. You pick 100 units in a day, you get 100X. You pick 50, you get 50X. You pick 10, you get 10X. So if you’re a fast worker, you can make well over minumum wage, if you’re a scrawny white guy you’ll make well under. ---
**Author:** ![The\_Tao\_s\_Revenge](https://avatars.discourse-cdn.com/v4/letter/t/73ab20/32.png) [@The\_Tao\_s\_Revenge](https://boards.straightdope.com/u/The_Tao_s_Revenge)\ **Post date:** [October 20, 2011, 3:14am UTC](https://boards.straightdope.com/t/economics-minimum-wage/599788/75 "2011-10-20T03:14:45Z")
> [@msmith537](#): > > Minimum wage essentially amounts to a subsidy for Raman noodle makers, malt liquor companies and OTB gambling. Wow . Was that insult necessary? I grew up poor and up until last spring was poor. Never gambled or been drunk. A lot of good people are poor. Why the bigotry against them? ---
**Author:** ![Lemur866](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lemur866/32/434_2.png) [@Lemur866](https://boards.straightdope.com/u/Lemur866)\ **Post date:** [October 20, 2011, 3:35am UTC](https://boards.straightdope.com/t/economics-minimum-wage/599788/76 "2011-10-20T03:35:33Z")
> [@The\_Tao\_s\_Revenge](#): > > Wow . Was that insult necessary? I grew up poor and up until last spring was poor. Never gambled or been drunk. > > A lot of good people are poor. Why the bigotry against them? And besides, if the argument that the minumum wage causes unemployment is true, that means it isn’t a subsidy for lower-functioning workers, because they aren’t worth hiring even at minumum wage. Pick a theory and stick with it. Does the minumum wage mean crappy workers can’t get jobs? Or does it mean they get jobs, but get paid more than they are worth? ---
**Author:** ![Schyler](https://avatars.discourse-cdn.com/v4/letter/s/45deac/32.png) [@Schyler](https://boards.straightdope.com/u/Schyler)\ **Post date:** [October 20, 2011, 7:05am UTC](https://boards.straightdope.com/t/economics-minimum-wage/599788/77 "2011-10-20T07:05:23Z")
My husband has a theory that the only one who comes out ahead when minimum wage increases is the IRS. IE: Workers make more and have to pay more income tax/ companies still have to maintain profits to pay those whopping bonuses to the top 10 people (many of whom lose “half” of it by law to the IRS) so the hours budget goes down and prices for their product goes up= no actual benefit for employees or consumers, but huge increases in revenue for the US Government (and basically nobody at the wheel there). I never could figure out why the US is borrowing so much money from China in the guise of “fixing the economy” when during the cold war (not really so long ago) they were “the enemy”. ---
**Author:** ![msmith537](https://avatars.discourse-cdn.com/v4/letter/m/d9b06d/32.png) [@msmith537](https://boards.straightdope.com/u/msmith537)\ **Post date:** [October 20, 2011, 1:58pm UTC](https://boards.straightdope.com/t/economics-minimum-wage/599788/78 "2011-10-20T13:58:05Z")
> [@The\_Tao\_s\_Revenge](#): > > Wow . Was that insult necessary? It’s the internet…so yes.😉 And no, I don’t actually believe that. [QUOTE=Lemur866] And besides, if the argument that the minumum wage causes unemployment is true, that means it isn’t a subsidy for lower-functioning workers, because they aren’t worth hiring even at minumum wage. Pick a theory and stick with it. Does the minumum wage mean crappy workers can’t get jobs? Or does it mean they get jobs, but get paid more than they are worth? [/QUOTE] They aren’t “crappy workers”, they just lack the skills or education needed to work at a job where they can create more value. The answer to your question is that it depends on the elasticity of demand for workers in those particular jobs and the marginal utility of each worker. But either way, they would be getting paid more than the market would otherwise value their skills. > [@Damuri Ajashi](#): > > For the record I am vehemently against rent control. Having lived in NYC most of my life, I don’t think anyone has a “right” to live in Manhattan regardless of their ability to pay. Education, sure; some basic level of health care, yes; a loft in Soho? WTF!!! Have you considered Weehawken? ---
**Author:** ![smiling\_bandit](https://avatars.discourse-cdn.com/v4/letter/s/e9a140/32.png) [@smiling\_bandit](https://boards.straightdope.com/u/smiling_bandit)\ **Post date:** [October 20, 2011, 2:15pm UTC](https://boards.straightdope.com/t/economics-minimum-wage/599788/79 "2011-10-20T14:15:58Z")
Speaking of rent control, it strikes me to be an analogous situation. Normal\* rent control effectively puts a floor on the price charged to any new customers. The result tends to be a high utilization rate of existing housing stock, but limited new stock available and high prices charged to customers. (Yes, in this cae the customers and the “employees” are the same). Thus New York might actually see _more_ housing stock created and an increase in supply, although it’s been 60 years of corruption and eventually co-ops, which have tended to drive out almost all the middle-class already. \*There are some forms of “rent control” which amount to extremely strong protections for renters, but which are not done entirely the same. The results here may be equal and opposite: spare housing stock exists but isn’t put up for rent. ---
**Author:** ![Lemur866](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lemur866/32/434_2.png) [@Lemur866](https://boards.straightdope.com/u/Lemur866)\ **Post date:** [October 20, 2011, 2:26pm UTC](https://boards.straightdope.com/t/economics-minimum-wage/599788/80 "2011-10-20T14:26:47Z")
> [@msmith537](#): > > But either way, they would be getting paid more than the market would otherwise value their skills. If they’re getting paid more than the market would value their skills, why doesn’t their employer fire them? There’s a law that says you can’t pay less than minumum wage. There’s no law that says you have to hire someone. [Previous page](https://boards.straightdope.com/t/economics-minimum-wage/599788.md?page=3) [Next page](https://boards.straightdope.com/t/economics-minimum-wage/599788.md?page=5)