Minimum wage

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A minimum wage is the lowest remuneration that employers can pay their workers legally. Equally, it is the floor price below which workers can not sell their labor. Although minimum wage laws apply in many jurisdictions, disagreements exist about the benefits and disadvantages of the minimum wage. Proponents of the minimum wage say it increases workers' living standards, reduces poverty, reduces inequality, and raises morale. Conversely, the opposite of the minimum wage says it increases poverty, increases unemployment (especially among unskilled or inexperienced workers) and damages businesses, because too high minimum wages require businesses to raise prices for their products or services to accommodate additional costs. pay higher wages.

The supply and demand model shows the welfare and employment losses of the minimum wage. However, if the labor market is not perfectly competitive, the minimum wage can improve market efficiency. For example, in the monopsonist labor market, the minimum wage set simply above the equilibrium wage can increase wages, employment, and economic efficiency. A considerable debate exists among economists about the real-world effects of minimum wages.

Modern national laws that enact union membership are mandatory that set minimum wages for members was first ratified in New Zealand and Australia in the 1890s. The movement for minimum wage is firstly motivated as a way to stop the exploitation of workers in sweatshops, by employers who are perceived to have unfair bargaining power over them. Over time, the minimum wage is seen as a way to help low-income families. Most countries have introduced minimum wage laws by the end of the 20th century.

Video Minimum wage

Histori

Modern minimum wage laws trace their origin to the Workers' Ordinance (1349), which was a decision by King Edward III which established the maximum wage for medieval English workers. King Edward III, who was a wealthy landowner, hung, like his masters, to slaves to cultivate the land. In the autumn of 1348, the Black Plague reached Britain and devastated the population. The severe shortage of labor caused wages to soar and encouraged King Edward III to set wage limits. Subsequent amendments to the ordinance, such as Statute of Laborers (1351), increase the penalty for paying wages above the stipulated level.

Although the laws governing wages initially set limits on compensation, they were ultimately used to set a decent wage. An amendment to the Statute of Laborers in 1389 effectively set wages for food prices. As time went on, the Peace Judge, who was accused of setting a maximum wage, also began to set formal minimum wages. The practice was finally formalized with the passage of the Minimum Wage Revenue Act of 1604 by King James I for workers in the textile industry.

At the beginning of the 19th century, Statutes of Laborers were repealed because more British capitalists embraced a laissez-faire policy that was not in accordance with wage rules (either upper or lower limits). The following nineteenth century saw significant labor unrest affecting many industrialized nations. When unions are decriminalized during this century, efforts to control wages through mutual agreement are made. However, this means that a uniform minimum wage is impossible. In the 1848 Principles of Political Economy, John Stuart Mill argued that because of the problem of collective action facing workers within the organization, it is a justified departure from the policy of laissez-faire or freedom of contract) to regulate the wages and hours of persons by law.

Only in the 1890s, the first modern legislative effort to regulate the minimum wage was seen in New Zealand and Australia. The movement for minimum wage was initially focused on stopping sweatshop work and controlling sweatshop proliferation in the manufacturing industry. The booths employ large numbers of women and young workers, paying those who are considered below-standard wages. Sweat shop owners are considered to have unfair bargaining power over their employees, and minimum wages are proposed as a way to make them pay fairly. Over time, the focus changes to help people, especially families, become more independent.

Maps Minimum wage

Legal minimum wage

The first modern national minimum wage is imposed by the government's recognition of unions which in turn establish minimum wage policy among its members, such as in New Zealand in 1894, followed by Australia in 1896 and Britain in 1909. In the United States, minimum wages were first introduced nationally in 1938, and they were reintroduced and expanded in the UK in 1998. There are now laws or binding collective bargaining on minimum wages in more than 90 percent of all countries. In the EU, 22 member states of 28 currently have a national minimum wage. Other countries, such as Sweden, Finland, Denmark, Switzerland, Austria and Italy, do not have minimum wage laws, but rely on groups of employers and unions to establish minimum revenue through collective bargaining.

The minimum wage rate varies greatly in many jurisdictions, not just in setting a certain amount of money - for example $ 7.25 per hour ($ 14,500 per year) under certain US state laws (or $ 2.13 for employees who receive tips , known as minimum wage ends), $ 11.00 in Washington state, or Ã, £ 7.83 (for those aged 25) in the UK - but also in terms of payment periods (eg, Russia and China set wages minimum monthly) or scope coverage. Currently US federal minimum wages are based on seven dollars, twenty-five cents ($ 7.25) per hour. However, some states do not recognize minimum wage laws like Louisiana and Tennessee. Other countries operate under federal minimum wages such as Georgia and Wyoming. Some jurisdictions even allow employers to calculate the tips given to their workers as credit to the minimum wage rate. India was one of the first developing countries to introduce a minimum wage policy. It also has one of the most complicated systems with over 1,200 minimum wage levels.

New York City passed a new law allowing it to raise the minimum wage to $ 15 per hour by the end of 2018. New York is the second country to support minimum wage increases after President Donald Trump was elected. In early 2018, eighteen countries began raising the minimum wage based on local living costs. These eight states include Alaska, Florida, Minnesota, Missouri, Montana, New Jersey, Ohio, South Dakota, Arizona, California, Colorado, Hawaii, Maine, Michigan, New York, Rhode Island, Vermont and Washington.

Informal minimum wage

Customs and extra-legal pressures from government or trade unions can result in de facto minimum wage . So does international public opinion, by pressuring multinational companies to pay the wages of Third World workers typically found in industrialized countries. The last situation in Southeast Asia and Latin America was published in the 2000s, but it was in companies in West Africa in the mid-20th century.

Setting minimum wage

Among the indicators that might be used to establish an initial minimum wage rate is that minimizes job loss while maintaining international competitiveness. Among these are general economic conditions as measured by real and nominal gross domestic product; inflation; labor supply and demand; level of wages, distribution and differences; terms of employment; productivity growth; labor costs; business operating costs; the number and trends of bankruptcy; the rank of economic freedom; standard of living and prevailing average wage rates.

In the business sector, concerns include increased expected costs of doing business, threats to profitability, rising unemployment rates (and higher government spending on welfare benefits raising tax rates), and the possible impacts on more experienced wages. workers who may have already earned the minimum wage according to the new law, or a little more. Among workers and their representatives, political considerations weigh as labor leaders seek to win support by demanding the highest possible level. Other issues include purchasing power, inflation indexing and standard working hours.

In the United States, the minimum wage was passed by the Fair Labor Standards Act of 1938. According to the Institute of Economic Policy, the minimum wage in the United States would be $ 18.28 by 2013 if the minimum wage had offset labor productivity. To adjust the increase in the level of worker productivity in the United States, raising the minimum wage to $ 22 (or more) an hour has been presented.

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Economic model

Supply and demand model

According to the labor market supply and demand model shown in many economic textbooks, increasing the minimum wage reduces the employment of workers with minimum wages. One such textbook states:

If a higher minimum wage increases the wage rate of unskilled workers above the level to be determined by market forces, the number of unskilled workers employed will fall. The minimum wage will provide the price of the most unproductive (and therefore lowest) worker's services outside the market.... the direct result of minimum wage laws is clearly mixed. Some workers, most likely those whose previous wages are closest to the minimum, will enjoy higher wages. Others, especially those with the lowest preelegulation wage rate, will not be able to find a job. They will be pushed into the ranks of the unemployed.

The cost of an enterprise is a function of increasing the wage rate, the higher the wage rate, the less hours the employer will require from the employee. This is because, as wage rates rise, it becomes more costly for companies to hire workers and thus companies employ fewer workers (or hire them for fewer hours). Therefore, the demand for the labor curve is shown as a line moving downwards and to the right. Since higher wages increase the quantity supplied, the labor supply curve is tilted upward, and is shown as the line moves up and to the right. If there is no minimum wage, the wage will adjust until the quantity of labor demanded equals the amount provided, reaching the equilibrium, where the supply and demand curves intersect. Minimum wage behaves as a classic floor price on labor. The standard theory says that, if set above the equilibrium price, more labor would be willing to be provided by the worker than the employer requested, creating a labor surplus, that is unemployment. The model of the market economy predicts the same thing from other commodities (like milk and wheat, for example): Artificially raising commodity prices tends to cause its supply to increase and demand for it diminishes. The result is a commodity surplus. When there is a surplus of wheat, the government buys it. Since the government does not employ surplus laborers, surplus labor takes the form of unemployment, which tends to be higher with minimum wage laws than without them.

The supply and demand model implies that by requiring a minimum price above the equilibrium wage, minimum wage laws will lead to unemployment. This is because more and more people are willing to work with higher wages while fewer jobs will be available at higher wages. Companies can become more selective on those they use so that the least skilled and least experienced will usually be excluded. The imposition or increase of the minimum wage will generally only affect jobs in the low-skilled labor market, since the equilibrium wage has reached or below the minimum wage, while in the higher skill labor market, the equilibrium wage is too high for a change in the minimum wage to affect employment.

Monopsoni

The supply and demand model predicts that raising the minimum wage helps workers whose wages are raised, and hurting unemployed people (or losing their jobs) when firms reduce jobs. But the proponents of the minimum wage argue that the situation is much more complicated than the model can take into account. One of the most difficult factors is the possibility of monopsony in the labor market, where each employer has market power in determining the wages paid. Thus, it is at least theoretically possible that the minimum wage may increase employment. Although a single entrepreneur market power is unlikely to exist in most labor markets in terms of traditional 'corporate towns', asymmetric information, imperfect mobility, and personal elements of labor transactions provide a level of wage setting power for most firms.

Modern economic theory predicts that while excessive excessive wages can increase unemployment because fixing prices above most labor demand, minimum wages at a more reasonable level can increase employment, and promote growth and efficiency. This is because the labor market is monopsonistic and workers constantly have no bargaining power. When poorer workers have more to spend it stimulate effective aggregate demand for goods and services.

Criticism of supply and demand model

The argument that minimum wages reduce employment is based on simple labor market supply and demand models. A number of economists (eg Pierangelo Garegnani, Robert L. Vienneau, and Arrigo Opocher & Ian Steedman), who built the work of Piero Sraffa, argue that the model, even with its assumptions, is logically incoherent. Michael Anyadike-Danes and Wynne Godley argue, based on the simulation results, that little empirical work done with textbook models is a potentially false theory, and consequently empirical evidence is almost non-existent for the model. Graham White argues, partly on the basis of Sraffianism, that the policy of increasing labor market flexibility, including the reduction of minimum wages, has no "intellectually coherent" argument in economic theory.

Gary Fields, Professor of Economics and Labor Economics at Cornell University, argues that the standard textbook model for minimum wage is ambiguous, and that standard theoretical arguments misjudge only one-sector markets. Fields says the two-sector market, where "entrepreneurs, service workers, and agricultural workers are usually excluded from minimum wage coverage... [and with] a sector with minimum wage coverage and the other without it [and possibly mobility between the two]," is the basis for better analysis. Through this model, Fields showed a typical theoretical argument to be ambiguous and said "the predictions derived from the textbook model certainly do not carry over to the case of two sectors.Therefore, since the non-closed sector exists almost everywhere, the textbook model predictions not reliable. "

An alternative view of the labor market has a low-wage labor market characterized as a monopsonist competition in which the buyer (entrepreneur) has far greater market forces than the seller (the worker). This monopsony may be the result of intentional collusion between employers, or naturalistic factors such as segmented markets, search costs, information costs, imperfect mobility and personal elements of the labor market. In such a case, a simple supply and demand graph will not result in a labor opening quantity and a wage rate. This is because while the aggregate supply supply of upwardly sloping labor remains unchanged, rather than using the upward labor supply curve shown in the supply and demand diagram, the monopsonistic entrepreneur will use a steep upward sloping curve corresponding to the marginal outlay to produce an intersection with supply. curves that produce lower wage rates than would happen under competition. Also, the number of workers sold will also be lower than the optimal competitive allocation.

Such cases are a type of market failure and result in workers being paid less than their marginal value. Under the monopsonistic assumption, a properly defined minimum wage can increase wages and jobs, with the optimal level equal to the marginal product of labor. This view emphasizes the role of minimum wage as a market regulatory policy similar to antitrust policy, as opposed to illusory "free lunch" for low-paid workers.

Another reason minimum wage may not affect work in a particular industry is that the demand for employee-generated products is not very elastic. For example, if management is forced to increase wages, management may continue to increase wages to consumers in the form of higher prices. Because the demand for products is not very elastic, consumers continue to buy products at higher prices and thus managers are not forced to lay off workers. Economist Paul Krugman believes this explanation fails to explain why the company does not charge this higher price without a minimum wage.

Three other reasons why the minimum wage does not affect the work advised by Alan Blinder: higher wages can reduce turnover, and hence training costs; raising the minimum wage can "make a debate" of potential employment hiring problems with higher wages than current workers; and the minimum wage worker may represent a small proportion of the business cost that the increase is too small for the problem. He admits that he does not know if this is true, but argues that "this list indicates that one can accept new empirical findings and still be a card-carrying economist."

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Empirical Studies

Economists disagree for the measurable impact of minimum wages in practice. This disagreement usually takes the form of a competitive empirical test of the elasticity of supply and demand in the labor market and the extent to which markets differ from the efficiency predicted by the perfect competition model.

Economists have conducted empirical studies on different aspects of minimum wages, including:

• Job effects, the most frequently researched aspect
• Effect on wage and income distribution among low-paid workers and high-paying workers
• Effects on income distribution among low-income and high-income families
• Effects on the skills of workers through job training and putting off work for education
• Effect on price and profit
• Effect on workplace training

Until the mid-1990s, a general consensus existed among economists, both conservative and liberal, that minimum wages reduced jobs, especially among young workers and low-ability workers. In addition to basic supply-demand intuition, there are a number of empirical studies that support this view. For example, Gramlich (1976) found that many of these benefits were given to higher-income families, and that adolescents were made worse by unemployment associated with minimum wages.

Brown et al. (1983) notes that the time-to-period study has found that for a 10 percent increase in the minimum wage, there is a decrease in juvenile occupation by 1-3 percent. However, the study found broader variations, from 0 to more than 3 percent, in their estimates for effects on youth unemployment (teens without work and looking for one). In contrast to simple supply and demand diagrams, it is commonly found that teenagers withdraw from the workforce in response to the minimum wage, resulting in the same possible reduction in supply and demand for labor with a higher minimum wage. and therefore has no impact on the unemployment rate. Using various specifications of work and unemployment equations (using the smallest squares of the usual vs. least squares regression procedures in general, and linear vs. logarithmic specifications), they found that a 10 percent increase in the minimum wage led to a 1 percent decrease in juvenile employment, and no change in level youth unemployment. The study also found a small but statistically significant increase in unemployment for adults aged 20-24.

Wellington (1991) updated the study of Brown et al. With data up to 1986 to provide a new estimate covering a period when the real value (ie, inflation-adjusted) of the minimum wage decreased, it has not increased since 1981. He found that a 10% increase in the minimum wage reduced absolute teen work by 0, 6%, without any influence on youth unemployment rate or adult youth.

Several studies have shown that the unemployment effect of small minimum wage increases is dominated by other factors. In Florida, where voters approved the increase in 2004, a follow-up comprehensive study after the upgrades established a strong economy with employment growth over the previous years in Florida and better than in the US as a whole. When it comes to training in the workplace, some believe that wage increases are taken out of training costs. An empirical study in 2001 found that "there is no evidence that minimum wages reduce training, and little evidence that they tend to improve training."

Some empirical studies have tried to ensure the benefits of minimum wages outside of job effects. In the analysis of census data, Joseph Sabia and Robert Nielson found no statistically significant evidence that minimum wage increases help reduce financial, housing, health, or food insecurity. The study was conducted by the Employment Policies Institute, a think tank funded by the food, beverage and hospitality industries. In 2012, Michael Reich published an economic analysis that suggested that the proposed minimum wage increase in San Diego might stimulate the city's economy by about $ 190 million.

The Economist wrote in December 2013: "The minimum wage, provided it is not set too high, could increase the payment without adverse effects on the work.... US federal minimum wage, 38% and the average, is one of the richest in the world. Some research finds no danger to the work of the federal or state minimum wage, others see little, but no one finds any serious damage.... However, the high minimum wage, in the form of labor-rigid labor markets, seemingly achieving employment, France has the highest rates of wages in the rich world, in more than 60% of the median for adults and a fraction far greater than the ordinary wages for young people.This helps explain why France also has a very high wage rate: youth unemployment rate: 26% for ages 15 to 24 years. "

Card and Krueger

In 1992, the minimum wage in New Jersey increased from $ 4.25 to $ 5.05 per hour (an increase of 18.8%), while in nearby Pennsylvania state remained at $ 4.25. David Card and Alan Krueger gathered information about fast food restaurants in New Jersey and eastern Pennsylvania in an effort to see what effect this increase had on jobs in New Jersey. The basic supply and demand model predicts that relative work should decrease in New Jersey. Card and Krueger researched the company before the New Jersey hike in April 1992, and again in November-December 1992, asking managers for data on the equivalent full-time staff level in their restaurant twice. Based on data from entrepreneurs' responses, the authors concluded that the increase in minimum wages slightly increased employment in New Jersey restaurants.

Cards and Krueger expanded on this early article in their 1995 book Myth and Measurement: The New Economy of Minimum Wage . They argue that the negative impact of minimum wage work is minimal if it does not exist. For example, they saw a minimum wage increase in New Jersey in 1992, a minimum wage increase in California in 1988, and an increase in federal minimum wage in 1990-91. In addition to their own findings, they re-analyzed previous studies with recent data, generally finding that older results from negative job effects do not persist in larger datasets.

Do research after Card and Krueger jobs

In 1996, David Neumark and William Wascher re-examined the Card and Krueger results using administrative payroll records from a large chain of fast food restaurant samples, and reported that minimum wage increases were followed by a decrease in employment. Assessment of data collected and analyzed by Neumark and Wascher initially did not conflict with Card and Krueger results, but in later versions edited they found a four per cent decrease in employment, and reported that "estimates of unemployment effects in payroll data are often statistically significant at level 5 - or 10 percent although there are some estimates and subsamples that yield insignificant - though almost always negative "job effects. Conclusions Neumark and Wascher were later denied in the 2000 paper by Card and Krueger. A 2011 paper has reconciled the differences between Card and Krueger survey data and payroll data based on Neumark and Wascher. This paper shows that both data sets show a positive conditional employment impact for small restaurants, but negative for large fast food restaurants. A 2014 analysis based on panel data found that the minimum wage reduces employment among adolescents.

In 1996 and 1997, the federal minimum wage increased from $ 4.25 to $ 5.15, thus increasing the minimum wage by $ 0.90 in Pennsylvania but only $ 0.10 in New Jersey; this allows for examination of the effect of minimum wage increases in the same area, after the 1992 changes studied by Card and Krueger. A study by Hoffman and Trace found results anticipated by traditional theory: adverse effects on employment.

Further applications of the methodologies used by Card and Krueger by other researchers produce results similar to their original findings, in additional data sets. A 2010 study by three economists (Arindrajit Dube of the University of Massachusetts Amherst, William Lester of the University of North Carolina at Chapel Hill, and Michael Reich of the University of California, Berkeley), compares adjacent districts in different states where the minimum wage has been raised in one of the states. They analyzed employment trends for several categories of low-wage workers from 1990 to 2006 and found that minimum wage increases did not have a negative effect on low-wage employment and managed to increase workers' incomes in food service and retail jobs, as well as the narrower categories of workers in restaurants.

However, a study in 2011 by Baskaya and Rubinstein from Brown University found that at the federal level, "minimum wage increases have a direct impact on wage levels and the associated negative impact on employment", stating, "The minimum wage increases increases teenage wage rates and reducing youth work. " Another 2011 study by Sen, Rybczynski, and Van De Waal found that "a 10% increase in minimum wage significantly correlates with a 3-5% decline in youth work." A 2012 study by Sabia, Hansen, and Burkhauser found that "minimum wage increases can have a large adverse labor demand effect for low-ability individuals", with the greatest effect on those aged 16 to 24.

A 2013 study by Meer and West concluded that "the minimum wage reduces net employment growth, primarily through its effect on job creation by expanding firms... which are most prominent for young workers and in industries with a lower proportion of lower-wage workers." This study by Meer and West was then criticized for the tendency of assumptions in the context of low-wage groups defined narrowly. The authors answered critics and released additional data that addressed criticisms of their methodology, but did not solve the problem of whether their data showed a causal relationship. Another 2013 study by Suzana Report? Ek of the Primorska University, the unemployed youth in Europe claimed there was "a negative impact, statistically significant minimum wage on youth employment." A 2013 study by labor economists Tony Fang and Carl Lin who studied minimum wages and employment in China, found that "minimum wage changes have significant adverse effects on employment in Eastern and Central China, and result in neglect of women, young adults , and low-skilled workers ".

Statistical meta-analysis

Some researchers have conducted a statistical meta-analysis of the job effects of minimum wages. In 1995, Card and Krueger analyzed 14 previous time series studies on minimum wages and concluded that there was clear evidence of publication bias (supporting studies that found statistically significant negative job effect). They indicated that subsequent studies, which had more data and lower standard errors, did not show the expected improvement in t-statistics (almost all studies have about two t-statistics, just above the level of statistical significance at Level 05). Despite the serious methodological charges, the minimum wage opponents largely ignore the issue; as Thomas Leonard notes, "The silence is quite deafening."

In 2005, T.D. Stanley points out that Card and Krueger results may indicate publication bias or no minimum wage effect. However, using a different methodology, Stanley concludes that there is evidence of biased publication and this biased correction indicates no relationship between minimum wage and unemployment. In 2008, Hristos Doucouliagos and T.D. Stanley conducted a similar meta-analysis of 64 US studies on unemployment effects and concluded that initial claims of Card and Krueger publications were still true. In addition, they conclude, "After the selection of this publication is corrected, little or no evidence of a negative relationship between minimum wage and the remainder of the work." In 2013, a meta-analysis of 16 studies in the UK found no significant impact on work attributed to minimum wages.

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Debate about the consequences

Minimum wage laws affect workers in most low-paying jobs and are usually assessed on the basis of the criteria for reducing poverty. Minimum wage laws receive less support from economists than from the general public. Despite decades of economic experience and research, the debate over the costs and benefits of minimum wages continues today.

Groups have a large ideological, political, financial, and emotional investment in issues surrounding minimum wage laws. For example, agencies that manage legislation have an interest in showing that their "law" does not create unemployment, just like unions whose members' finances are protected by minimum wage laws. On the other side of the problem, low-wage entrepreneurs like restaurants pay for the Employment Policies Institute, which has issued many studies against minimum wages. The presence of these powerful groups and factors means that the debate on this issue is not always based on impartial analysis. In addition, it is very difficult to separate the impact of minimum wages from all other variables that affect employment.

The following table summarizes the arguments made by them for and against the minimum wage law:

The widely circulated argument that minimum wages are not effective in reducing poverty was provided by George Stigler in 1949:

• Employment may fall more than proportional to wage increases, reducing overall income;
• As untouched economic sectors absorb workers released from closed sectors, wage declines in undisclosed sectors may exceed wage increases in closed wages;
• The impact of minimum wages on the distribution of family income may be negative except for less but better work is allocated to needy family members than for, for example, adolescents from non-poor families;
• Prohibiting employers to pay less than the legal minimum wage is equivalent to prohibiting workers from selling their workforce for less than minimum wage. Legal restrictions that employers can not pay less than the budgeted salary equals legal restrictions that workers can not work at all in the protected sector unless they can find employers willing to hire them for such wages.

In 2006, the International Labor Organization (ILO) argued that the minimum wage could not be directly related to unemployment in countries suffering from job losses. In April 2010, the Organization for Economic Co-operation and Development (OECD) released a report stating that countries can reduce youth unemployment by "lowering the cost of hiring low-skilled youth" through sub-minimum training wages. A study in US states shows that the annual salary and business averages grow faster and jobs grow faster in countries with minimum wages. This study shows correlation, but does not claim to prove cause and effect.

Although strongly opposed by the business community and Conservative Party when it was introduced in Britain in 1999, the Conservative Party reversed their opposition in 2000. Accounts differ on the effects of minimum wages. The Center for Economic Performance found no visible impact on employment levels of wage increases, while the Low Paying Commission found that employers have reduced their employee recruitment rates and hours, and found ways to cause workers to be more productive (especially company services ). The Institute for Study of Labor finds prices in the minimum wage sector rise significantly faster than prices in the non-minimum wage sector, within four years after the minimum wage. Neither the trade unions nor the employers' organizations outperformed the minimum wage, although the latter had done so very hard until 1999.

In 2014, minimum wage supporters cite a study that found that job creation in the United States is faster in states that raise their minimum wage. In 2014, proponents of the quoted minimum wage news organization reported that countries with the highest minimum wage collect more job creation than other parts of the United States.

By 2014, in Seattle, Washington, liberal and progressive business owners who have supported a new minimum wage of $ 15 a city say they may delay developing their business and thus create new jobs, due to the uncertain time scale of implementing wage increases. However, after that at least two business owners were cited expanding.

The dollar value of the minimum wage loses purchasing power over time due to inflation. Minimum wage laws, such as proposals for indexing minimum wages on average wages, have the potential to keep the dollar value from the relevant minimum and predictable minimum wage.

With regard to the economic effects of introducing the minimum wage legislation in Germany in January 2015, recent developments have shown that the feared unemployment increase has not materialized, but, in some sectors of the economy and territory of the country, it has decreased employment opportunities primarily for temporary workers and part-time jobs, and some low-paid jobs have disappeared altogether. Due to this overall positive development, Deutsche Bundesbank revised its opinion, and ensured that "the impact of introducing minimum wages to total work volumes appears to be very limited in the current business cycle".

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Survey of economists

According to a 1978 article in the American Economic Review, 90% of economists surveyed agreed that minimum wages increase unemployment among low-skilled workers. In 1992 a survey found 79% of economists agreed with the statement, and by 2000, 46% agreed completely with the statement and 28% agreed with provisos (74% total). The authors of the 2000 study also recalculated data from a 1990 sample to show that 62% of academic economists agreed with the statement above, while 20% agreed with provisos and 18% disagreed. They claim that the reduction of consensus on this question is "possible" due to Research Card and Krueger and subsequent debates.

A similar survey in 2006 by Robert Whaples surveyed a PhD member from the American Economic Association (AEA). Whaples found that 47% of respondents wanted the minimum wage eliminated, 38% supported the increase, 14% wanted it maintained at current levels, and 1% wanted it to decline. Another 2007 survey conducted by the University of New Hampshire Survey Center found that 73% of labor economists surveyed in the United States believe that 150% of the current minimum wage would result in job losses and 68% believe that the minimum wage mandated would leading to an increase in the recruitment of workers with greater skills. 31% felt that there would be no recruitment change.

The survey of labor economists finds a sharp difference in the minimum wage. Fuchs et al. (1998) studied labor economists at the top 40 research universities in the United States on questions in the summer of 1996. 65 of their respondents were almost equally divided when asked whether minimum wages should be increased. They argue that different policy views are not related to the view of whether raising the minimum wage will reduce youth employment (median economists say there will be a 1% reduction), but on value differences such as income redistribution. Daniel B. Klein and Stewart Dompe conclude, based on previous surveys, "the average support level for minimum wages is somewhat higher among labor economists than among AEA members."

In 2007, Klein and Dompe conducted a non-anonymous survey of minimum wage supporters who had signed the "Raise the Minimum Wage" statements issued by the Institute for Economic Policy. 95 of the 605 signatories answered. They find that the majority is signed on the grounds that it diverts income from employer to worker, or equal bargaining power among them in the labor market. In addition, the majority consider unemployment to be a moderate potential weakness for the improvements they support.

In 2013, diverse groups of 37 economics professors were surveyed in their view of the impact of minimum wages on employment. 34% of respondents agreed with the statement, "Increasing the federal minimum wage to $ 9 per hour will make it more difficult for low-skilled workers to find work." 32% disagree and the rest are unsure or have no opinion about the question. 47% agreed with the statement, "The cost of distortion raises the federal minimum wage to $ 9 per hour and indexes it to inflation is small compared to the benefits for low-skilled workers who can find employment that this will be the desired policy", while 11% disagree.

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Alternative

Economists and other political commentators have proposed alternatives to minimum wages. They argue that these alternatives can address the problem of poverty better than the minimum wage, as this would benefit the wider population of low-wage earners, unemployment, and widespread distribution of costs rather than concentrating on low-wage employers.

Basic earnings

Basic income (or negative income tax) is a social security system that periodically gives every citizen a sufficient amount of money to live frugally. It is said that the recipient of the basic income will have a much greater bargaining power when negotiating wages with the employer because there will be no risk of squalor for not taking a job. As a result, job seekers can spend more time looking for a more appropriate or satisfactory job, or they can wait until a higher paying job appears. Or, they can spend more time improving their skills at the university, which will make them more suitable for higher paying jobs, as well as providing many other benefits. Experiments on Basic Income and NIT in Canada and the US show that people spend more time studying as the program progresses.

Proponents argue that basic income based on a broad tax base will be more economically efficient, since minimum wages effectively impose high marginal taxes on employers, causing losses in efficiency.

Minimum income is guaranteed

The minimum guaranteed income is another proposed social welfare provision system. This is similar to the base income or negative income tax system, except that it is usually conditional and subject to the test of the means. Some proposals also establish willingness to participate in the labor market, or willingness to do community service.

Refundable tax credit

Refundable tax credits are mechanisms in which the tax system can reduce taxes owed by households to below zero, and generate net payments to taxpayers outside of their own payments into the tax system. Examples of refundable tax credits include earned income tax credits and additional child tax credits in the U.S., and working tax credits and child tax credits in the UK. Such a system is slightly different from the negative income tax, since the refundable tax credit is usually only paid to households who have earned at least some income. This policy is directed against poverty rather than the minimum wage, as it avoids low-income worker subsidies supported by high-income households (for example, adolescents who still live with their parents).

In the United States, earned income tax credit rate, also known as EITC or EIC, varies by country - some can be refunded while other countries do not allow refundable tax credits. The federal EITC program has been expanded by a number of presidents including Jimmy Carter, Ronald Reagan, George H.W. Bush, and Bill Clinton. In 1986, President Reagan described the EITC as "the most anti-poverty, the best pro-family, the best job-creation measure to get out of Congress." The ability of income tax credit received to provide greater monetary benefits to the working poor rather than the increase in the minimum wage and at a lower cost to the community is documented in the 2007 report by the Congressional Budget Office.

The Adam Smith Institute prefers tax cuts to the poor and middle class instead of raising wages as an alternative wage minimum.

Collective bargains

Italy, Sweden, Norway, Finland and Denmark are examples of developed countries where there is no minimum wage required by law. Such countries, especially the Nordics, have very high union participation rates. In contrast, minimum wage standards in various sectors are determined by collective bargaining.

Wage subsidy

Some economists such as Scott Sumner and Edmund Phelps advocate a wage subsidy program. Wage subsidies are payments made by the government for work done by people. It is based on every hour or with earned income. Advocates argue that the major shortcomings of EITC and minimum wage should be avoided with wage subsidies. However, wage subsidies in the United States suffer from a lack of political support from one of the major political parties.

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US Movement

In January 2014, seven Nobel economists - Kenneth Arrow, Peter Diamond, Eric Maskin, Thomas Schelling, Robert Solow, Michael Spence, and Joseph Stiglitz - and 600 other economists wrote to the US Congress and the US President urged that, by 2016, the government The US should raise the minimum wage to $ 10.10. They passed the Minimum Wage Liability Act introduced by US Senator Tom Harkin in 2013. US Senator Bernie Sanders introduced a bill in 2015 that would raise the minimum wage to $ 15, and in 2016 the president's campaign ran on its upgrading platform. Although Sanders is not nominee, the Democratic National Committee adopts a $ 15 minimum wage tightening in their 2016 party platform.

The reaction of former McDonald's USA Ed Rensi about raising the minimum wage to $ 15 is really pushing people out of the picture when it comes to labor if they have to pay the $ 15 minimum wage they would look into replacing humans with such machines would be more efficient the cost of having an ineffective employee. During an interview on the morning of FOX Business Network with Maria, she stated that she believes an increase of up to $ 15 per hour will cause job loss at an incredible rate. Rensi also believes it not only affects the fast food industry, the franchise he sees as the best business model in the United States, it depends on the people who have low working skills that must grow and if you can not pay them with a decent wage then they will be replaced with the machine.

At the end of March 2016, California Governor Jerry Brown reached an agreement to raise the minimum wage to $ 15 by 2022 for big business and 2023 for smaller businesses.

In contrast, the relatively high minimum wage in Puerto Rico has been blamed by various politicians and commentators as a very significant factor in the Puerto Rico government's debt crisis. One study concluded that "Employers are reluctant to hire workers because the US federal minimum wage is very high compared to the local average."

In December 2014, unions were exempted from the recent minimum wage increases in Chicago, Illinois, SeaTac, Washington, and Milwaukee County, Wisconsin, as well as California cities Los Angeles, San Francisco, Long Beach, San Jose, Richmond, and Oakland.

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See also

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Note

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Further reading

• Burkhauser, R. V. (2014). Why the minimum wage increase is a poor way to help the working poor (No. 86). Policy Paper of IZA, Institute for Labor Studies (IZA).

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External links

• Minimum wage in Curlie (based on DMOZ)
• The Minimum Wage Sources Guide of the International Labor Organization (UN body)
• National Minimum Wage (UK) from the official UK government website
• Find It! According to Topic: Wages: Minimum Wage of US Department of Labor
• Characteristics of Minimum Wage Workers: 2009 US Department of Labor, Bureau of Labor Statistics
• Change History on Minimum Wage Law of US Department of Labor, Wages and Working Hours
• Impact of Minimum Wage Increase on Employment and Family Income of the Congressional Budget Office
• Real Inflation and Real Wage: A Fact Sheet Congressional Service Research
• Minimum Wage in Central and Eastern Europe The Central European Database
• Pricing and Wages - research guides at the University of Missouri library

Support

• Issue of Minimum Wage from AFL-CIO
• Guide to the Issues on Minimum Wage from Economic Policy Institutions
• US Minimum Wage $ 15: How Fast Food Industries Can Adapt Without Removing Jobs from the Institute for Political Economy Research, January 2015.

Oppose

• Report the Minimum Wage from The Cato Institute
• Economic Effects of Minimum Wage from Show-Me Institute
• Economics in One Lesson: Applied Lesson, Chapter 19: Minimum Wage Law by Henry Hazlitt

Source of the article : Wikipedia