Thursday, March 20, 2014
Newt on Minimum Wages
This is from an article Newt Gingerich did recently.
Not exactly an absolute correlation. Also one must make allowances for the variation in average national income - Greece & Portugal are less than half as well of as us so it is obvious minimum wage would have to be half as well (though this does rather make a nonsense of the theories that minimum wage laws either produce fairness or increase earnings. US minimums well below those of European states that they are richer than are also going to cause less interference in the market.
In theory low minimum wages should do as little harm as no minimum wages because neither discourage people from paying the amounts of money real employers are willing to pay.
But overall there is a clear trend that those countries with no minimum wage laws, or with minimums, low compared to national income, have generally lower levels of unemployment.
Who would have guessed?
But it is better to have evidence.
Not exactly an absolute correlation. Also one must make allowances for the variation in average national income - Greece & Portugal are less than half as well of as us so it is obvious minimum wage would have to be half as well (though this does rather make a nonsense of the theories that minimum wage laws either produce fairness or increase earnings. US minimums well below those of European states that they are richer than are also going to cause less interference in the market.
In theory low minimum wages should do as little harm as no minimum wages because neither discourage people from paying the amounts of money real employers are willing to pay.
But overall there is a clear trend that those countries with no minimum wage laws, or with minimums, low compared to national income, have generally lower levels of unemployment.
Who would have guessed?
But it is better to have evidence.
Labels: economics, Fixing the economy, International politics
