Wednesday, December 16, 2015

Some terrible arguments for raising the minimum wage...

Are on offer here.

First, try this on for size:
Those against raising the minimum wage often argue that it will hurt young people the most and that they “need the experience” of working at the minimum wage. But notice that the youth unemployment rate in Germany is 7.8 percent, and in Switzerland, it is 8.5 percent. In contrast, youth unemployment is 15.5 percent in the U.S., even though the U.S.’s minimum wage (using Purchasing Power Parities exchange rates) is below that of these Germany’s and Switzerland’s $10 and $9.20 an hour respectively. In other words, both have higher minimum wages, but much lower youth unemployment rates. Their overall unemployment rate is also lower: 4.5 percent and 3.4 percent, respectively. The minimum wage makes no difference on unemployment.
Now, if we want to be naive empiricists, we'd have to say that Komlos is clearly wrong. A higher minimum wage makes a big difference in unemployment: it makes it much lower! But Komlos doesn't say that. Why? Well, he would admit, there are other factors affecting unemployment besides the minimum wage. But once one admits that, the game is over, as the minimum wage opponent can claim that absent those very same factors  Komlos is acknowledging, unemployment would be much higher in Germany and Switzerland than in the United States.

The next baddie:
Another luminary contending for the spotlight, the Florida whippersnapper Marco Rubio, currently the third runner up, had the brilliant hypothesis that, “If you raise the minimum wage, you’re going to make people more expensive than a machine.” Cashiers are already being replaced by self-checkout machines, but people still need a living wage, Marco!
Actually, I don't really see anything being worth called an "argument" here at all: just some flippant mockery of Rubio. How is the fact that low-wage workers are already being replaced by machines supposed to undermine, rather than support, Rubio's argument?! And how is the fact that people "need" a living wage supposed to prevent their replacement by an automated burger flipper if that living wage is set too high?

I am all for helping poor Americans. But minimum wages are an attempt to do so on the cheap (no additional tax dollars needed), and are a crude, blunt attempt at that.

Instead, let's ensure that every American can have a decent life whether they have a salary or not, and then let employers and employees negotiate any wage agreements that suit both.


  1. "A higher minimum wage makes a big difference in unemployment: it makes it much lower!"

    Did you want to say "much higher" here?

    1. No: Germany and Switzerland have higher minimum wages, and lower unemployment.

    2. I thought one of the complaints is that the minimum wage increases unemployment? Do I have my terms switched up here?

  2. I don't think Switzerland has a minimum wage, also Germany introduced it's just at the start of this year. So he chose his examples rather tendentiously.

  3. What are you thoughts on a Job Guarantee rather than a Basic Income? The MMT guys advocate a JG generally for economic reasons (which I don't know much about) but here's a post that argues that the JG is more politically viable:


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