Minimum Wage Set to Rise Later this Month...Hmm

Delicious Digg Facebook reddit Technorati

Rebecca Wilder | Jul 6, 2009

The Wall Street Journal is noting that the minimum wage hike may come at a bad time. This is the second minimum wage hike since the beginning of the recession. Some bullet points from the article (I added my commentary in bold):

"In the past, minimum-wage increases have done little to dent job creation." Rw: Yes, when the labor market and economy are tight, firms can pass on some of the new cost via output prices.
"You're going to have a very negative response. In a recession like this, companies don't have the pricing power to pass on those costs." [says John Silva, chief economist at Wells Fargo]
"Economists say there are 2.8 million workers earning between the current federal minimum wage of $6.55 an hour"..."But some estimates figure an additional seven million workers are affected because their wages are tied to the minimum and will go up accordingly."
"The Economic Policy Institute estimates that the minimum-wage increase will add $5.5 billion to the economy, and that this money is likely to be readily spent by low-wage workers, giving a boost to local economies. Heidi Shierholz, an economist at the liberal think tank in Washington, argues that "it is actually a good time" for an increase in the minimum wage. RW: But there will be offsets, via reduced spending as workers lose hours and jobs. The net effect is likely negligible at best, probably negative.
"Still, many economists also see long-term positive effects for the economy from boosting the income of those at the bottom of the economic ladder. They note that many small businesses may benefit through higher productivity in the form of improved worker retention and less churn." RW: I don't understand why there would be improved worker retention and less churn if the distribution of workers stays the same. The mean has changed - that is all.

The Wall Street Journal does present the pros and cons of the minimum wage hike - the nominal minimum wage rate now approaches the rate adjusted for the cost of living. However, the cons will be quite evident, as different measures of unemployment rise, teen unemployment and probably the U-6 measure of labor underutilization, which includes part-time work for economic reasons (unless they change the survey to include the minimum wage effects). This could, and probably will, grow the national unemployment rate if workers lose jobs in lieu of manager's reducing hours.

Originally published at News N Economics and reproduced here with the author's permission.

Delicious Digg Facebook reddit Technorati

Comments

<strong>Jordans 9 was released in 1993. On October 6th 1993, MJ gave the basketball world a shock when he announced his retirement from the NBA. And the Air Jordan 9 model was the first Jordan model released after his first retirement and Jordan never played a whole season with this Jordans model. A special cleated version of the Air Jordans 9 was made and helped MJ in his Birmingham Barons baseball career. MJ wore the white/black colorway version of the Air Jordan 9 model for one scene in the movie Space Jam. The Air Jordans 9 model featured an inner sock sleeve and nubuck accents, just like the Air Jordan 7 and 8. The sole of the Air Jordan Retro 9 featured different symbols and languages for different countries. But the Air Jordans had not disappeared from the courts though. They were produced with not only #23 on the back, but with numbers for other superstars.

Reply to this comment By Guest on 2009-11-17 01:21:23

Welcome to our website for Nike SB, Nike Dunks and Nike Shoes, they are really cheap for you, so don't hesitate, cheapest Air Force Ones and <Nike Air Max are here waiting for you!

Reply to this comment By Guest on 2009-11-17 01:42:06

nike sb all over the world. Nike skateboarding, also we know as nike shox released many special edition shoes, are very sick and most sought after. Many of the nike sb special shoes are [url=http://offerkicks.com]nike dunks[/url], we call them nike sb dunks. And we can see many common nike running shoes in our lifes, they are named timberland boots. You will feel very good with a pair of nike air max shoes when you are running. The nfl jerseys, one of the most successful lines of nike, has been released more than 25 years. They are still popular today.

Reply to this comment By Guest on 2009-11-17 02:13:11

Post A Comment

You must be logged into the site to post a comment. You may login with your username and password in the upper right hand corner of this page. If you do not have a login, you may register for an account.