The Minimum Wage is Up, So is Employment. Why?
|July 9, 2014||Posted by Jeffery J. Smith under The Geonomist Blog|
This 2014 excerpt of CEPR, Jun 30, is by Ben Wolcott.
At the beginning of 2014, 13 states increased their minimum wage. Those states had faster employment growth than the states where the minimum wage remained at its 2013 level.
Ed. Notes: When companies are forced by politicians to pay a higher minimum wage, many of them do. That probably means they could have afforded to pay a higher minimum all along, so no harm done. As those better paid workers spend their higher wages, they create more demand for goods and services and so more jobs in supplying those goods and services. So far, so good. However …
Some companies can not afford to pay more, such as those hiring fewer than five people to do marginal work. Those tiny firms have no choice but to downsize. Sorry, ex-employee.
Other companies will raise their prices to pass on the fatter paychecks and get away with it. However, their customers in their own businesses could decide to raise their prices, too. Cities and states with the highest wages do also have the highest prices and likely the fastest inflation (the government website is down as I write this).
The places with high or rising employment rates tend to be popular places, destination states, where economies are growing any way. In those places, government collects more taxes and can hire more bureaucrats. Public employment can account for a hunk of the job growth, too.
Finally, while many of us are happy to use the club of government to impose our will on business, business is just as happy to use that same club to get its way, too. It’s a win/lose battle, with business winning most of the time — look at corporate welfare — and the public losing most of the time — the minimum wage is not even livable!
Even if the minimum wage were livable, it would still only apply to entry level workers (who should be working their way up rather than trying to live off doing menial tasks). A minimum would not, obviously, pay the unemployed or the sick or the aged. To get money to them, it can’t be in the form of a wage at any level.
Actually, it’s not only the jobless who need an income apart from their labor; the hired need one, too. Everyone needs one. When people get such a cushion, then they can negotiate higher wages, and laws for minimum wages become absolutely obsolete.
More important for human health and happiness, an income apart from labor is the only way to shrink the workweek, expand leisure, and free people to find the purpose in existence.
And it’s not like the money for sharing does not exist. Indeed, the common wealth is huge. Huge and invisible. It’s the worth of Earth, Earth being something all of us need and none of us made, and land value being something an owner does not create but community at large does. Our spending for locations and resources is a huge spending stream just awaiting our sharing, a task ideally suited to a combination of land dues (or taxes) and rent dividends, a combination that would obviate minimum wages and the arguing over them.