Wednesday, February 05, 2014

Forbes: Everything you know (about the minimum wage) is wrong

This piece in Forbes is pretty well done. The main points:
  • There are certainly working poor people supporting families on the minimum wage, but they are the minority of minimum wage workers. If the point is to help these people, increasing the minimum wage is a poorly targeted and expensive way of doing it, even if there weren't adverse effects (and there's a lot to suggest that there would be).
  • You can't talk about general labour productivity to draw insights about the appropriateness of specific wage rates. Average labour productivity has gone up, but there's evidence that the productivity of minimum wage workers has actually been dragging down that average - the minimum wage may have risen five or six times faster than minimum wage-earners' productivity, not so slowly that it's nearly $15 lower than it should be.
The author takes a rather dim view of minimum wage proponents, which is too bad. I don't think that this is a sneaky way to get at class warfare hatched in the mind of left-wing conspirators, I think that minimum wage proponents genuinely believe that raising it would be helpful, and that the statistics they're presenting are sufficient evidence of that. It's unfortunate that policy makers are not demanding better information before starting the debate.

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