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[lsanderson]

Would cutting the minimum wage raise employment?

It seems that more and more Serious People (and Fox News) are rallying around the idea that if Obama really wants to create jobs, he should cut the minimum wage.

Would cutting the minimum wage raise employment? - Paul Krugman Blog - NYTimes.com

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Comments

[sethb.livejournal.com]

I noticed he wrote about the effects of reducing all wages. Reducing the minimum wage would increase the number of people employed slightly, and probably produce a decline in the total wages paid.

[daedala.livejournal.com]

I think that depends on whether all wages somehow anchor to the minimum wage. I don't know if that is the case or not.

[dd-b.livejournal.com]

I suspect it isn't the case; I suspect there's lots of elasticity in the middle, and the CEO salaries aren't much tied to the minimum, but the fast food worker salaries are more likely to be a little bit.

Anyway, that's one of the important questions, definitely.

[sethb.livejournal.com]

Union contracts aren't indexed to the minimum wage.

Raising or lowering it might have some effect on other wages, but not very much. Companies (in happier times) often raised incoming wages, with no effect on employees who'd been there for years.

[yarram.livejournal.com]

...and probably, as a side effect, increase the number of people without health insurance of any kind. Employment dis-qualifies many people from subsidized insurance programs, but alas, even at present levels, minimum wage doesn't pay enough that workers can afford the insurance offered by their employers.

Micro/Macro

[lsanderson.livejournal.com]

Not quite. I think he's saying if it won't work at the macro level, it won't work at the micro level. It's just a shill.

Re: Micro/Macro

[sethb.livejournal.com]

That claim is clearly bogus. Give one person a billion dollars, he's really happy and never has to work. Give everybody a billion dollars, and people aren't better off. (Some are, some are worse, on the whole society suffers.)

[lsanderson.livejournal.com]

http://krugman.blogs.nytimes.com/2009/12/16/minimum-wages-a-few-clarifications/