Archive for March 11th, 2013

Discussions about minimum wages are often tedious. On his blog, Greg Mankiw uses a very simple argument to counter recent claims for higher minimum wages:

Why $9?

Presumably, the president’s economic team must believe that the adverse employment effects become sufficiently large at some point that further increases are undesirable.

The fact of the matter is that a higher minimum wage ultimately surpasses the productivity of some workers. At this point the least productive people will lose their jobs. So unless we know everyone’s productivity, any claim for a higher minimum wage

  • either assumes that all workers create enough value per hour (to make it profitable to hire them at the minimum wage)
  • or neglects that the weakest members of the society will no longer find a job.

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