[ Ventilation ] | Minimum wage

7-27-2007 5:46 pm

Nathan Tyree: Minimum wage

Opponents on the minimum wage have long argued that it depresses hiring. economists David Card and Alan Krueger did a study that compared New Jersey (which raised its wage) and Pennsylvania (which didn't. The results blew minimum wage haters out of the water. New Jersey actuall saw decreases in unemployment and little inflation. PA had the opposite.

In 2002 Oregon made a substantial increase to the state minimum wage. Despite the doomsday predictions of right wingers, unemployment actually shrank and the state saw inflation remain at the same rate it had been before.

It is a tricky subject, one has to first realize that how much people earn has nothing to do with inflation. Inflation is a function of the relative value of a currency. How much workers are paid is in fact an effect of inflation (or deflation), not a cause of it.

Comments (5)

David - ()

The NJ/PA experiment you cite assumes all other things being equal. I'd also be curious as to the length of time they studied the effects.

Despite the doomsday predictions of right wingers

Please. Don't. Using terms like right wingers actually makes you sound like a conservative, you know. Must political sides be drawn in every discussion?

By the way, I think fuzmeister's theme breaks the new Vent stylization tags.

Edited by Administrator Brandon

Brandon - (<-- The Electric Sunshine Man, yo!) - Administrator

It should be right now.

I think, anyway

Quote Nathan Tyree

Nathan Tyree - (Overwhelmed by existential angst)

"Please. Don't. Using terms like right wingers actually makes you sound like a conservative, you know. Must political sides be drawn in every discussion? "

But, this is an issue on which political lines have long been drawn. Liberals (by and large) support minimum wage, Conservatives (by and large) oppose it.

Nathan Tyree - (Overwhelmed by existential angst)

"The NJ/PA experiment you cite assumes all other things being equal. I'd also be curious as to the length of time they studied the effects."

It's been some time since I read about it, but I seem to recall that the study ran for a couple of years.

That's really beside the point though. The simple truth is that there has never been any evidence that increases to the minimum wage fuel inflation or depress hiring. That idea came from the fiery rhetoric of members of a certain political party that has long believed that the gubment has no right to tell a business what to do.

There is, however, quite a lot of evidence that increases in minimum wage actually fuel economic growth, lead to more investment, greater spending, and bigger profits for corporations.

Archimago - ()

If a raise in minimum wage has no effect on inflation, then why don't we just make sure everyone takes home $10/hour. According to you there is no evidence that it would fuel inflation.
Why stop there? According to you

Quote Nathan Tyree

There is, however, quite a lot of evidence that increases in minimum wage actually fuel economic growth, lead to more investment, greater spending, and bigger profits for corporations.

Minimum wage should be set at $20 an hour. How about $30? That will really drive our economy!

At what point do you think your theory breaks down? $100? $200?

The NJ/PA study that you cite is controversial, because of the method used to collect data. Actual payroll data for the two States suggest a 5% decrease in hours paid.

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