Tuomas
Literotica Guru
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- Jun 24, 2006
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OK.. *gets out economics books he hoped he would never see again since college*Pure said:what i hoped for was that some of the discussants would cite some documentation. a number of states and cities have adopted minimum wages and the effects have been studied. i don't believe in 'armchair economics' that prejudges the issues.
Byrns & Stone: "Induced Unemployment: Finally, some unemployment is induced by certain government policies. The minimum-wage law, for example, limits job opportunities for unskilled and inexperienced workers by overpicing their labor."
In another portion: "Why have labor unions long sought high minimum-wage laws even though union workers invariably recieve wages far above these wage floors? Misguided humanitarianism may play a rôle, but another reason is that wage floors limit the ability of unskilled workers to compete with skilled union workers. For example, if two unskilled workers willing to work for $3.00 hourly apiece can do the job of a $6.50 per hour skilled worker, a $3.35 minimum-wage eliminates their ability to compete." (Enfasis mine)
To quote page 599, "Minimum-wage laws, for example, may hurt far more workers than they help, with young workers and members of minorities being especially harmed."
A more complete essay on the negative effects of minimum-wage policies are discussed in Walter Williams' seminar, "Minimum Wage, Maximum Folley."
On the positive side we have... errr, lots of political discourse. Minimum wage remains a populist economic movement, whose real economic benefit remain in discussion. Most economists agree that there is a relations between wages and production, and that production cannot excede wages. The debate centres more on when exactly salaries excede production.
On a more concrete note, we have the "Noble" Experiment conducted by Allende and his Cronies in Chile. Visualising that raising the minimum wage would help the less-affluent members of Chilean society, Allende tripled the minimum-wage. The results were evident; less than six months later, inflation was an excess of 500% anually, there was food rationing in a time of record harvest and his ailing government ended in what the BBC has called, "the bloodiest coup in recient Latin American history." On the other hand, in 2001, Ricardo Lagos raised the minimum wage in 16% with the only resulting consecuence of a 10% increase in unemployment and a 5% jump in inflation. Clearly in the latter case, the country was able to absorb the change.
The labor market usually adjusts itself to the needs of workers and changes the real minimum wage. For example, currently in Chile -and in spite of Lagos' increase in minimum wage- only 5% of the workforce earns minimum wage. The remaining 95% earn well above that, and that number is constantly increasing. In real terms, the minimum wage is for entry-level workers while they are trained. After that, they recieve a higher salary, either through an offician increase or through bonuses.