CCPA: Raising the Floor: An argument for the minimum wage

Posted on February 9, 2006. Filed under: Uncategorized |

The Canadian Centre for Policy Alternatives Study “Raising the Floor”: An argument for the minimum wage

Why the minimum wage is good.  In response to a program I heard on RadioEconomics about Walmart being good.  Their analysis is so simplistic, so divorced from the subtlety of the real world!

Economic critics of the minimum wage (and supporters of Walmart) miss:

  • The value of job stability.  “There may be several long-term dynamic impacts of increasing the minimum wage that are beneficial. With low unskilled wages, firms may find it profitable to use production methods that involve many unskilled workers in dead-end jobs. As described in the simple demand-and-supply model, increased minimum wages may induce firms to switch toward methods of production that emphasize more training and, with it, more job stability and income.” 
  • Part of the reduction in employment by increasing the minimum wage will be offset by growing the economy by giving people more money. 
  • The biggest problem with arguments against the minimum wage is that they overestimate the elasticity of demand for labour. 


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