Minimum Wages
Some good discussion by Steven Landsburgg and Brad de Long on minimum wages.As Landsburg says:
The minimum wage kills very few jobs, and the jobs it kills were lousy jobs anyway. It is almost impossible to maintain the old argument that minimum wages are bad for minimum-wage workers.
In fact, the minimum wage is very good for unskilled workers. It transfers income to them.
However as Brad points out he's wrong to think this transfer of income is from the employers of minimum wage staff. It's much more likely to be from the consumers of the products they make, ie most of us. If the higher wages increase productivity then the cost will be minimal.
I remember vividly Michael Portillo and other Tories running around saying Labour's minimum wage would cost 1m or even (I think Peter Lilley) had it costing 2m jobs (based on a minimum wage only slightly higher than the one that was actually introduced). That they could believe this nonsense was presumably something to do with the fact that they had been members of a government that saw unemployment rise by between 1m and 2m. If the Tories still believe this then I am surprised they have not made it's abolishment a policy plank - presumably it would immediately create 1m to 2m jobs.
posted by Matthew @ 7/11/2004 08:31:00 PM
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