From: Kharin (kharin@kharin.com)
Date: Sun Oct 26 2003 - 11:07:01 MST
"The minimum wage does not raise the wage of those workers who for whatever reason would sell their labour at less then minimum wage, it just puts them out of work. Employers won't magically come up with the money to pay more than they think a position is worth, they just do without or load the work on to other people. Everyone involved is worse off than they would be if they were allowed to agree on a wage."
Hmm. On the whole I think the scenario concerning wage increases being cancelled out by rising inflation is more likely. The UK introduced its minimum wage quite recently and predictions of the above kind seem to have greatly exaggerated, with only some sectors of the economy exhibiting that form of problem to any particularly significant degree. I suspect there is a laffert curve effect involved; careful setting of the minimum wage being likely to raise wages without too much difficulty for employers to absorb the attendant costs, but as the minimum wage increases the costs become more of a problem which leads to the counter productive results you describe.
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