A lot of this points out why I don't understand "left-leaning" folk.
When the minimum is forced up, being better than the minimum gets harder.
A lot of that can be drawn out in a straightforward way on an introductory Economics class chalkboard. It makes sense & no one rational would argue that regardless of the lvel, employment would stay the same. At $100 p/h, the level of employment would decrease. On the chalkboard, the biggest most straightforward effect would be that most jobs paying less then that would cease to exist. The other effects of pushing the remaining low pay jobs over the line & a few of the ones close to it up a bit seem to have a hard job of it to make the whole thing worthwhile.
But the real world experience doesn't paint such a grim picture. Minimum wage changes, have not been shown in real world case studies to have very much of an effect on employment rates. The effects are usually cloudy & cannot be distinguished from the effects of say, a credit crisis.
Now economists can rationalise this in lots of ways. Maybe the labor market tends to place employers of low wage employees in better bargaining positions, so when you look at the difference between what a worker is willing to earn (there is no floor other then what his other options set) & what an employer is willing to pay (the marginal output of that labor), they settle closer to the bottom. Perhaps the various wildcards of social & psychological effects of the difference between a minimum wage job & welfare supplements or some such wishy-washy effect is screwing with things. You can even come up with all sorts of circular sounding arguments about stimulating spending by putting money in the hands of the poor. To put it on the chalkboard you need to talk abut it in terms of information availability, market power, mobility, secondary effects etc.
But when you take a step back, there just aren't many good examples of minimum wage humiliating itself in the same way that grain price floors or wool subsidies have. For such a heavy handed economic policy it has remarkably little catastrophe that goes with it. No stockbroker surpluses being dumped on unsuspecting thord world markets. No stockpiles of teachers that need to be refined into ethanol at a cost of 20X higher then cane ethanol.
The automatic rejection of minimum wage increases based on the classic economic theories is not rational.
But the real world experience doesn't paint such a grim picture. Minimum wage changes, have not been shown in real world case studies to have very much of an effect on employment rates. The effects are usually cloudy & cannot be distinguished from the effects of say, a credit crisis.
Now economists can rationalise this in lots of ways...
How about this one? No minimum wage increase yet has exceeded the actual market value of the jobs in question. They have simply been feel-good placebos that have marginalized very few real workers while gaining political kudos for the administrations in power.
Any real attempt to raise the minimum wage too far beyond the market value of the labor will result in mass unemployment, mass inflation, or both. Its actually a kind of rationing, and behaves as such.
I don't think that is true. There are a large number of people in almost all countries that earn minimum wage.
In Australia, the minimum wage or equivalent ranges $14-$18 (AUD $1 = aprox US$0.95 a month ago, approx $0.70 now). This is probably close to the median for countries of comparable GDP pp. Many employers pay the minimum.
The minimal US minimum wage is relatively low. But there are plenty of other examples around.
When the minimum is forced up, being better than the minimum gets harder.
A lot of that can be drawn out in a straightforward way on an introductory Economics class chalkboard. It makes sense & no one rational would argue that regardless of the lvel, employment would stay the same. At $100 p/h, the level of employment would decrease. On the chalkboard, the biggest most straightforward effect would be that most jobs paying less then that would cease to exist. The other effects of pushing the remaining low pay jobs over the line & a few of the ones close to it up a bit seem to have a hard job of it to make the whole thing worthwhile.
But the real world experience doesn't paint such a grim picture. Minimum wage changes, have not been shown in real world case studies to have very much of an effect on employment rates. The effects are usually cloudy & cannot be distinguished from the effects of say, a credit crisis.
Now economists can rationalise this in lots of ways. Maybe the labor market tends to place employers of low wage employees in better bargaining positions, so when you look at the difference between what a worker is willing to earn (there is no floor other then what his other options set) & what an employer is willing to pay (the marginal output of that labor), they settle closer to the bottom. Perhaps the various wildcards of social & psychological effects of the difference between a minimum wage job & welfare supplements or some such wishy-washy effect is screwing with things. You can even come up with all sorts of circular sounding arguments about stimulating spending by putting money in the hands of the poor. To put it on the chalkboard you need to talk abut it in terms of information availability, market power, mobility, secondary effects etc.
But when you take a step back, there just aren't many good examples of minimum wage humiliating itself in the same way that grain price floors or wool subsidies have. For such a heavy handed economic policy it has remarkably little catastrophe that goes with it. No stockbroker surpluses being dumped on unsuspecting thord world markets. No stockpiles of teachers that need to be refined into ethanol at a cost of 20X higher then cane ethanol.
The automatic rejection of minimum wage increases based on the classic economic theories is not rational.