the unseen harms of the minimum wage

Don Boudreaux lists out some various possible effects of an increase in the minimum wage, all of which hurt low skilled workers:

First, neither I nor any other economist insists “that the minimum wage must raise unemployment.” Raising unemployment is a possible – indeed, likely – effect of a higher minimum wage; it is not, however, a necessary effect. The argument is that a higher minimum wage reduces the full range of the attractiveness of employment options open to low-skilled workers. The effects of a higher minimum wage might play out exclusively in the form of more-intense demands on workers – that is, a demand by employers that workers work harder and produce more output per hour. The effects of a higher minimum wage might play out exclusively in the form of reduced fringe benefits for workers. The effects of a higher minimum wage might play out exclusively in the form of fewer paid hours of work per year for low-skilled workers who nevertheless all keep their jobs (and who continue to be hired). The effects of a higher minimum wage might play out exclusively in the form of fewer jobs for low-skilled workers.

In a previous post, he explains why these effects (especially disemployment) might not be visible in the data:

Bryan is correct. And not only might a minimum-wage hike that was anticipated not result in any observable layoffs at the time it kicks in, but also the unemployment rate of low-skilled workers might not jump noticeably or detectably as a result of the higher minimum wage. The reason is that, once employers anticipate the looming hike in the minimum wage, they then – before the actual hike – start trimming their workforces (probably mostly through attrition and reduced hiring). Some, perhaps many, low-skilled workers, discouraged by the increasing difficulty they face when searching for jobs, respond by dropping out of the workforce before the minimum-wage hike actually happens. By the time the minimum-wage hike does occur, the resulting increase in the measured rate of unemployment of low-skilled workers might well be genuinely small.

And a skilled commentor explains why the most famous pro-Minimum Wage study might fall prey to these reasons:

This would apply to Card and Krueger as well, the legislation in NJ was passed in 1990 but the increase didn’t take place until 1992.

About christopher fisher

The blog is meant for educational/entertainment purposes. All material can be used and reproduced in any length for any purpose as long as I am cited as the source.
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3 Responses to the unseen harms of the minimum wage

  1. “form of reduced fringe benefits for workers.”
    Low paid workers don’t get much of anything in the first place. Glad I found you, led here re did Paul have access Gospels? I am Ehrman fan and Bock and Pagels too but traditionalists just hate them. Such wide range topics here-wow !Invite visit my cartoon /humor blog carldagostino.wordpress.com

    • Thank you for the comment. I think Ehrman brings a new and valid perspective to theology that rightly questions what many evangelicals take for granted. I do think that a dispensationalist, Open Theist understanding of the Bible answers his most pressing criticism of Christianity. I have a couple of grievances with Ehrman I describe on this blog, but he seems like a neutral source to understand events in the texts (he is not pushing a particular theological agenda).

      I did make a new post describing some fringe benefits that I saw harmed due to cost increases when I worked as a waiter. Namely: food and talking to the waitresses. Not all fringe benefits are in the form of health or paid leave perks.

      I did visit your site. I definitely can relate to the Noah cartoon (it made me chuckle). I once tried chopping down a tree with an axe, and forever after will use “chainsaws” as one prime example of how amazing the modern word is.

  2. Pingback: possible harms of the minimum wage | reality is not optional

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