Comments on: The Minimum Wage: Time to Start Working On the Next Increase

By: Chris

Chris — Thu, 14 Feb 2013 00:02:27 +0000

Producers pass cost increases through by raising prices or seeking other cost savings such as outsourcing to other economies or implementing computer systems. Imagine how much it would cost to go to the movies if the minimum wage were 25/hour? Raising the price of the movie means less people go to the movie and then over time there are less movies. Socialism does not work. It has been tried MANY times before and it has always failed.

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By: pjr

pjr — Thu, 09 Feb 2012 20:31:31 +0000

Using the BLS calculator, the 1968 minimum wage ($1.60) was $10.34 in 2011 dollars. The country is far richer today. We probably ought to raise today’s minimum wage by a dollar each year for the next three (or more) years and then index it to inflation. Ignore the false claims that it will hurt the economy and do it.

By: Jamison Kuhle

Jamison Kuhle — Wed, 08 Feb 2012 19:42:24 +0000

Great Post, Mr. Bernstein!

There does seem to be a pragmatic issue with your solution, however. It is certainly true that some states stay ahead of the national minimum wage curve by raising floor standards in internal legislatures, but is this not largely due to differences in relative incomes, cost of living, and a slew of other QOL indicators, from state to state? If national minimum wage was indexed to, say, CPI, or any other national aggregate for that matter, would that not inhibit business potential in states with lower living costs? At the very least, national indexing would certainly skew the efficacy of any measuring stick thereafter in smaller economy states. Could the federal mandate be simply that states index to their own unemployment, GDP, CPI? Great discussion!

By: Dilip

Dilip — Wed, 08 Feb 2012 19:30:37 +0000

There is a related article talking about Greece’s minimum wage pertaining to the Euro-crisis here:
http://www.economonitor.com/rebeccawilder/2012/02/08/the-unfounded-obsession-with-greek-minimum-wages/

By: Tony Zirngibl

Tony Zirngibl — Wed, 08 Feb 2012 16:45:31 +0000

As soon as you attach raises automatically after 3 months, 6 months or one year, employers will review whether to dump people to avoid keeping them at higher wages. That becomes a revolving door to recycle people for less wages.

By: Jared Bernstein

Jared Bernstein — Wed, 08 Feb 2012 03:23:08 +0000

I think the average is the right choice here because you want to show the how the minimum is tracking an aggregate measure that is not itself affected by inequality trends. For eg, suppose the economy and productivity are growing but the median is stagnant…the minimum relative to the median might be stable but the min wg relative to the average would be falling.

By: John Miller

John Miller — Wed, 08 Feb 2012 03:09:49 +0000

Mr. Bernstein,

Thank you for the article. I would like to pose a couple of questions.

1) You spoke of the average wage in the us as a benchmark for comparison of minimum wage. I am curious why you did not choose the median wage instead. I know it sounds like semantics, but particularly with data subject to a hard floor and unlimited ceiling, I would expect a person of your experience and education to choose a more meaningful statistic.

2) Your own data points to the fact that a modest increase increase in minimum wage would effect less then 10% of workers. Meaning, I presume that workers who start at minimum wage and then receive pay raises after a probationary term. Given that, should the statutory minimum truly be considered “a living wage.” Could it instead be considered a minimum starting wage? Would you support a plan that allowed newly hired workers to be payed a lower rate in order to reduce the risk of hiring in exchange for a higher long term minimum? (Just for example $7.00/hr for 3 months, $7.75/hr after 3 months, 8.50 after 6 months, $9.50/hr after a year. Perhaps with a limit of not more then 10% of a businesses employees making below the $9.50 rate)

By: genauer

genauer — Wed, 08 Feb 2012 00:32:21 +0000

just 2 short comments:

a) I think there is correlation of minimum wage with subsequent rising unemployment, in this picture. Obvious exception Vietnam time.
b) for a very long time the German union(s) (there is effectively only one, those with half the board seats : – )
opposed minimum wages, for first the government not to interfere in wage disputes, and second that it might set a guide line to the lower end. Germany has no and will not have a general minimum wage.

Most Germans see a general social minimum as more effective and just.

By: CEK

CEK — Tue, 07 Feb 2012 21:53:23 +0000

I have lived through lots of minimum-wage increases, and never in my life has it ever gotten high enough to noticeably reduce minimum-wage employment. Every single time an increase is proposed, either state or federal, employers and Republicans yell out the same old line about how a higher wage will make jobs disappear. And every time an increase passes, the only visible sign is that some low-income people get a little more money.