Friday, January 31, 2014

demand for a much higher minimum wage stems from selfishness, ignorance, and/or a lack of policy imagination

There *are* a number of reasons why a *somewhat* higher MW could have little or no impact-- and importantly, beyond that, much of an impact that would be observed/measured. But any increase in the minimum wage that hopes to make a difference has to get around the theory/logic: Why would "greedy" firms pay an employee more than he produces?

If one wants to increase the MW to a level that would support someone trying to support a household, it would obviously have employment effects-- perhaps large ones. (We have little evidence on something like this, but what we have is telling-- e.g., the short-lived imposition of the federal MW in Puerto Rico in the 1930s; what we can infer from the govt's unwillingness to extend the current MW to our territories.)

And then back to the second paragraph of my post, there is NO debate that the MW is poorly-targeted AND clearly inferior to other policy alternatives (given even modest unemployment effects). So, why do politicians, partisan hacks and laypeople focus on it so much: selfish (economic and/or political) interests, ignorance and wishful thinking, lack of policy imagination. Are there other explanations?


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