Almost Classical

Minwage3 (Photo credit: Wikipedia ) Researchers at the University of Washington, asked by Seattle to study the increase in the city's minimum wage have some difficult news for the city and previous research on wages : Seattle’s Minimum Wage Hike May Have Gone Too Far | FiveThirtyEight : The study is far from the last word on the impact of Seattle’s law, let alone the $15 minimum wage movement more generally. Indeed, just last week another study used similar methods to reach seemingly the opposite conclusion: A report from the Institute for Research on Labor and Employment at the University of California, Berkeley, found that Seattle’s minimum wage, “raises pay without costing jobs,” as a press release on the study announced.   The UW study was the most data-complete study of its kind. The UW researchers work in only one of four states with complete hourly wage data. The other studies? Done in states that required "estimating" and "models" in the more e...

Map of U.S. Minimum Wage laws (Photo credit: Wikipedia ) Minimum wage debates tend to overstate the estimated and real effects of any changes to the minimum wage in the Unites States. Most studies show a minor increase in a place with wages already rising  has no significant effect on employment. But, there is a cost when wages rise quickly and there is an effect when wages fail to keep pace with the cost of living. The problem is that the minimum wage is not, contrary to any mythologies, the income of most adults with full-time work. As the debates below suggest, there is a limit to what a local economy can bear in terms of wage growth. At the same time, we know that low wages also reflect jobs that can be or will be automated away in many instances. We are in a new era of creative destruction, with no real plan for the displaced workers without skills. Allow me to provide an example of how silly on all sides the debate on wages is. Mark Perry gets the facts right in hi...

I'm not a huge fan of the minimum wage, but I also admit it isn't going away. It's a feel-good public policy that some nations embrace with complex brackets (Australia indexes for age of worker) and others simply don't have at all. There's little economic correlation between the minimum wage and job creation, because the wage tends to trail earned wages in skilled trades. Which nations don't have legal minimum wages? How about Denmark, Iceland, Norway, Sweden, and Switzerland! Germany has regional minimums, handled by local governments, just as many states in the United States set their own minimums. How can it be that social democracies don't have minimum wages? They have a history of employee ownership, through unions with board seats at companies. The United States lacks a similar history of corporate-union or even government-union cooperation. Our unions are more adversarial. (Maybe they should try another approach; it might increase wages and influ...

I dislike the notion of a "minimum wage" but recognize that it isn't about to be abolished. And, there is the sad reality that many companies don't recognize that employees are the value behind any business or non-profit. Organizations are their people. My first problem with the national minimum wage is that any nationwide standard ignores the cost of living variations from region to region. Beyond that, we have issues of how to set a minimum wage, how to index it to inflation, and many other complicated issues. If you set rates by region, would you also have regional inflation indices? What about tiered minimums, based on age or other variables? There are already odd exemptions to the minimum wage, namely in the dining industry. Should there be a full-time minimum wage apart from a part-time minimum? How many people working 40-hour weeks earn the minimum wage? If they do earn the minimum, for how long do they earn this before their first raises? How long before...