What price minimum wage?

[brendan]

Should there be a minimum wage? Why?

In 152 pages David Neumark and William Wasche discusses over 90 recent studies on the effect of minimum wages on employment, including 4 studies from Australia. Their conclusions:
"Minimum Wages and Employment: A Review of Evidence from the New Minimum Wage Research" by David Neumark, William Wascher http://papers.nber.org/papers/w12663

"We review the burgeoning literature on the employment effects of minimum wages - in the United States and other countries - that was spurred by the new minimum wage research beginning in the early 1990s. Our review indicates that there is a wide range of existing estimates and, accordingly, a lack of consensus about the overall effects on low-wage employment of an increase in the minimum wage. However, the oft-stated assertion that recent research fails to support the traditional view that the minimum wage reduces the employment of low-wage workers is clearly incorrect. A sizable majority of the studies surveyed in this monograph give a relatively consistent (although not always statistically significant) indication of negative employment effects of minimum wages. In addition, among the papers we view as providing the most credible evidence, almost all point to negative employment effects, both for the United States as well as for many other countries. Two other important conclusions emerge from our review. First, we see very few - if any - studies that provide convincing evidence of positive employment effects of minimum wages, especially from those studies that focus on the broader groups (rather than a narrow industry) for which the competitive model predicts disemployment effects. Second, the studies that focus on the least-skilled groups provide relatively overwhelming evidence of stronger disemployment effects for these groups."

There is also good evidence that higher minimum wages raise the high school dropout rate.

[costargh]

LOL! This is funny because at work yesterday I was talking to an american girl that is now working with us (previously working at Burger King in America) and she said that yesterday (boxing day) she made 100 dollars less than she would have made in 2 weeks in the states. (exchange rates are pretty close at the moment)

Apparently the minimum wage over there us really crap which is why there is compulsory tipping in many states for waitresses.

My view is that if someone has to move countries because the minimum wage is too low and as result they are living in poverty then the system has failed society.

[brendan]

the system

what system?

[Collin Li]

My view is that if someone has to move countries because the minimum wage is too low and as result they are living in poverty then the system has failed society.

Economics shows us that if we set a minimum price on wages, then we could reduce the amount of workers. Hence, minimum wage increases are often associated with increases in unemployment, and also an increase in inequity (the few who become employed under a minimum wage regime get paid more, while the ones who don't make the cut will earn nothing).

[costargh]

Should an 20 year old receive $5.15 an hour in a developed country such as America?

[Collin Li]

Should an 20 year old receive $5.15 an hour in a developed country such as America?

Wouldn't it be better if he or she could have more... but at what price?

Does it make sense to give a 20 year old a wage of $13 an hour, but possibly lose jobs for other 20 year olds? Installing a minimum wage causes employers to lay off some workers, or potential employers to hire less than they would have, since their costs will now outweigh their benefits in some cases.

[brendan]

Should an 20 year old receive $5.15 an hour in a developed country such as America?

Why does the answer to that question even matter? Should they receive $100/hr? Would not $200/hr be even better?

[costargh]

Should an 20 year old receive $5.15 an hour in a developed country such as America?

Why does the answer to that question even matter? Should they receive $100/hr? Would not $200/hr be even better?

Of course it matters because it determines their ability to live above the poverty line

[Collin Li]

But what about those who lose their jobs? Unemployment is below the poverty line as well! The market does not guarantee perfection, but the question is: can government intervention do a better job?

[costargh]

Minimum wages aren't exactly high. In the example of America, the point being made is that whether the market is determining the crap wage, or the government, it is still a crap wage.

Wages have been going up for the past century yet our unemployment is at record lows...
A few cents doesn't determine employment. Demand for employees due to booming economies does.

[brendan]

Should an 20 year old receive $5.15 an hour in a developed country such as America?

Why does the answer to that question even matter? Should they receive $100/hr? Would not $200/hr be even better?

Of course it matters because it determines their ability to live above the poverty line

What makes you so sure that If I was an employer I will hire just as many people as I did in the absence of a minimum wage? I don't have any obligation to hire anyone. I don't have to hire people if I don't like the price. As long as that is the case, the evidence is clear, minimum wages increase unemployment.

Wages have been going up for the past century yet our unemployment is at record lows...

So what? Who is to say that unemployment would not have been even lower in the absence of minimum wages? In fact that is the reality:

In 152 pages David Neumark and William Wasche discusses over 90 recent studies on the effect of minimum wages on employment, including 4 studies from Australia. Their conclusions:
"Minimum Wages and Employment: A Review of Evidence from the New Minimum Wage Research" by David Neumark, William Wascher http://papers.nber.org/papers/w12663

"We review the burgeoning literature on the employment effects of minimum wages - in the United States and other countries - that was spurred by the new minimum wage research beginning in the early 1990s. Our review indicates that there is a wide range of existing estimates and, accordingly, a lack of consensus about the overall effects on low-wage employment of an increase in the minimum wage. However, the oft-stated assertion that recent research fails to support the traditional view that the minimum wage reduces the employment of low-wage workers is clearly incorrect. A sizable majority of the studies surveyed in this monograph give a relatively consistent (although not always statistically significant) indication of negative employment effects of minimum wages. In addition, among the papers we view as providing the most credible evidence, almost all point to negative employment effects, both for the United States as well as for many other countries. Two other important conclusions emerge from our review. First, we see very few - if any - studies that provide convincing evidence of positive employment effects of minimum wages, especially from those studies that focus on the broader groups (rather than a narrow industry) for which the competitive model predicts disemployment effects. Second, the studies that focus on the least-skilled groups provide relatively overwhelming evidence of stronger disemployment effects for these groups."

[costargh]

But the point being made is that the minimum wage is not unreasonable.
A lot of employers choose to pay more than the minimum wage seen under enterprise bargaining agreements or individual workplace agreements. Is that not an example of employers choosing to pay their employees more?

The fact is that not everyone is on a minimum wage and thinking of the minimum wage so statistically is practically inconvenient while still being theoretically correct.

[brendan]

But the point being made is that the minimum wage is not unreasonable.
A lot of employers choose to pay more than the minimum wage seen under enterprise bargaining agreements or individual workplace agreements. Is that not an example of employers choosing to pay their employees more?

The fact is that not everyone is on a minimum wage and thinking of the minimum wage so statistically is practically inconvenient while still being theoretically correct.

Let's get this straight:
1. There exists a minimum wage
2. A lot of employers choose to pay more than the minimum wage seen under enterprise bargaining agreements or individual workplace agreements. This is an example of employers choosing to pay their employees more than the minimum wage
3. Therefore there ought to exist a minimum wage.

Does that make sense to anyone?

[costargh]

Give me a figure or estimate from that data of what the unemployment levels would be at without minimum wages. I can say with a great deal of certainty (based on common sense) that it would not be a significant difference.

Like I said above, the fact that so many people are not on a minimum wage (ie. being paid higher) indicates that minimum wages are not seen as such a big problem for employers due to their relatively low minimum.
If the minimum was high than it would be differnt.

[costargh]

I see it as a 'safety net' to prevent slave labor occurring.
I think it should be higher but I don't know to what degree it should be higher.