You can’t persuade, cajole or incentivise people off welfare benefits into jobs that don’t exist for the simple reason that minimum wage legislation makes them illegal.
The minimum wage is perhaps the classic example of the disjoint between economists an the general public. It's a bad policy - it makes the people it purports to help worse off. In the past I'd always assumed that people just don't get it. I've not understood why, but that's life. Sometimes, because we're all different, we just disagree. However the article above from Mark Littlewood in The Telegraph makes me wonder. It makes me hope: maybe people do realise that all-else-equal a minimum wage makes it less likely that companies hire low skilled workers. But this is often masked by rising incomes. Maybe people do get that in a recession the last thing you want to do is raise barriers to employment. In which case - if people do sit back and think "yeah, maybe raising the costs of hiring people isn't the best thing to do when many companies are struggling", perhaps once the recession is over they'll realise that the same logic applies all the time...
The minimum wage has been a horrible policy and it's ill effects have been hidden due to (i) rising wealth; (ii) other policies that probably do increase jobs (e.g. the New Deal) that are timed to coincide with the minimum wage (showing that politicians aren't stupid). But now we're in a recession it's harder to ignore logic. Minimum wages harm low skilled workers. Minimum wages harm low skilled workers. Minimum wages harm low skilled workers. Assuming we all want to help low skilled workers, let's scrap it?
Wow! I love this!*
Posted by: coach outlet | November 08, 2010 at 02:49 AM