I don't think research done during normal economic times is going to be very predictive of the effect of a minimum wage change during this unusual recession. I personally support a raise in the minimum wage, but really, who knows what will happen in a borderline deflationary environment.

You know there is this amazing new thing called the internet, and Google, and you can actually find fairly non-political, good analysis on the subject like this: http://www.ingentaconnect.com/content/bpl/bjir/2009/00000047/00000002/art00011

Research is that increases, at least as modest as these, will have no impact on employment, especially when strong macro-economic forces are driving unemployment up or down. This might actually have a modest stimulative effect by shifting money from entities that are saving to people who will spend the money.

I get so damn tired of hearing from Peter Morici on my radio...

Plus I have a little parable I call 'Jimmy the Stockboy'. In short if 99 people at the company which employs Jimmy get a $1/hour raise and that causes poor Jimmy to lose his job should those workers in the aggregate care? If so why? Because collectively they are gaining $99 an hour in income. That first hour of extra income is plenty enough to throw Jimmy a nice going away lunch, and the subsequent $99 per hour enough to pay for Jimmy's unemployment until he gets a new job where he too will get a $1 an hour more than he used to.

Now if it can be shown empirically that the minimum wage increase threw Jimmy and every other stockboy in the country out of work forever there MIGHT be a case for workers rejecting minimum wage. On the other hand we know that if employers nationwide decided to move to a J-I-T delivery system and eliminate that entire job category Jimmy and his fellow stockboys would find themselves on their asses on the sidewalk tout suite.

In light of employers full willingness to cut job rolls any time it assists their bottom the line, the employment argument directed to workers against minimum wage is just another example of pleading to liberal guilt/working class solidarity.

Well as much as we like hard-working Jimmy, at some point workers have to look to both their own individual interests and those of workers as a class and not get fooled into obsessing over effects at the margin. Yes raising the minimum wage may have disproportionate effects on inner city youth. The answer is to direct more societal resources towards the inner city and not for workers nation wide to tighten their belts.

So even if the evidence is there at the margin, how does it measure up when you aggregate income overall? That is the key question.

While the research about the effect on unemployment is clear, I was bothered this morning by news that the local university was cutting hours for minimum wage jobs to offset the minimum wage increase. How common is that sort of measure, and what is its effect in the aggregate?

However, there is little reason to believe that it will result in substantial job loss.

The change from the current to the new min wage will almost certainly not result in substantial job loss but replacing the min wage with an hourly wage subsidy would seem a much better way to go. It would allow the elimination of minimum wage entirely even while raining the return on work which might in-fact significantly increase employment. It might even counteract some dead weight losses.

In normal economic times and at/near full employment, raising the minimum wage makes sense, and gets the desired effect of improving the lives of the aggregate working class. In virtual deflationary times where unemployment is 2-3x higher than baseline, it makes absolutely no sense at all, as it will lead to job losses and hour cuts. I would like to see one iota of this research, that will address this issue from this basic angle. Otherwise, I will chalk this up to he said/she said.

Who would lose their jobs? Wouldn’t it be the least productive employees? Wouldn’t these be employees of undercapitalised small businesses which are only kept afloat by access to cheap labour? Wouldn’t the economy be better off without such businesses? Wouldn’t the owners in many cases be better off working for wages themselves, not mortgaging the house and trying to be “entrepreneurs”?

The orthodox arguments against raising the minimum wage are bunk. They are just an updated and thinly disguised retread of the old wages-fund doctrine that said workers couldn't get wage increases without hurting some other group of workers.

There are better arguments against relying exclusively on a legislated minimum wage -- and on legislation in general -- rather than building the collective power to negotiate wages increases.

Hey all,

I am exploring this topic on my blog at http://thebirdcagelining.blogspot.com/
I am wondering if someone could tell me of sources/arguments that debunk this classical or orthodox arguments against the minimum wage. My understanding of economic theory isn't robust enough to see where the flaw is.

Thank you!