Wednesday, December 20, 2006

Raising Unemployment for the Unskilled?

From the NY Times, an article "Raising the Floor on Pay:"

"On the verge of controlling Congress, the Democrats are making a much-delayed increase in the minimum wage their signature attempt to lift incomes and quiet widespread economic anxiety.

The Democrats plan to introduce a bill in Congress next month that would increase the federal minimum for the first time in a decade — to $7.25 an hour in the spring of 2009, reaching that level in three steps from the present $5.15 an hour.

More than 13 million workers earning less than $7.25 an hour today, or just above that, would get raises."

Problem: Demand curves for unskilled workers slope downward, so a 40% hike in the wage for unskilled workers would mean that there were would be FEWER than 13 million jobs after an increase in the minimum wage. Many of those workers would probably be getting pink slips instead of raises.

And if it was possible to legislate raises for the 13 million unskilled workers currently earning $5.15 per hour, why are politicians being so stingy? After all, wouldn't a raise to $17.25 per hour be a lot better for the 13 million workers than just $7.25? Or $27.25 per hour?


At 12/20/2006 8:25 PM, Anonymous Anonymous said...

The cost of automation is going down while the cost of labor is going up. where the curves intersect is where people are replaced by machines. Go aheaqd and drive the minimum wage up and you will find out just how many jobs can be disappeared.

At 12/21/2006 8:30 AM, Anonymous bob wright said...

Since we've got our pens out and we're doing so much good - it is the Christmas season after all - why not legislate a "maximum" also - get rid of those pernicious, greedy, selfish, rich people. Or how about everyone in America earns $50,000/year, indexed to inflation of course. No matter what you do, or how much training you have, you will earn a livable wage. Everyone is treated the same. Now that's what I call equality.

At 12/21/2006 11:15 PM, Anonymous T villella said...

No way Bob. How is anyone suppose to look good on MTV's Crib show on that kind of income?
Unless everyone wear's matching blue jumpsuits and rides around in bubble domed golf carts.


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