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March 31, 2005

More More Minimum Wage.

The Coyote Blog has an excellent takedown of the minimum wage from the point of view of someone who actually has to pay it. Anyone who wants to argue in favour of the minimum wage in the UK should try reading it....and note that our minimum is higher than those causing him problems in the US.

March 31, 2005 in Economics | Permalink

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Comments

Now this may be the most stupid comment in the world, but when the minimum wage was introduced in the UK, weren't we all supposed to be plunged into the worst recession ever and see businesses failing left right and centre?

Now all that may have happened and I haven't noticed, or be just around the corner, but from where I'm sitting things don't look that bad.

Tim adds: No, it’s not the most stupid comment in the world at all. You are comparing pre minimum wage with post minimum wage. Most people do that.
What we should be comparing is now with the minimum wage with what now would have been like without the minimum wage. As the empirical research comes in it is showing that there has been a drop in the demand for low cost labour, hours have been cut etc. Just as theory would have predicted. It doesn’t actually matter all that much right now, as we are still expanding the economy. Next recession it will bite hard.....and there are also those who say that since it hasn’t caused much harm yet, let’s raise it. Well, why not? Why not 10 pounds an hour? Twenty?

Posted by: mrs mcmuffin | Mar 31, 2005 4:21:12 PM

Tim, while you are highlighting the correct things to compare, there is one more thing to be said. Unless you find a better way of estimating what things would otherwise have been like, the best one you have is how things were. Of course, you can get a better estimate quite easily, but refine your estimation system too much and you introduce more error than you remove, a garbage in garbage out thing.

Posted by: P.M.Lawrence | Apr 7, 2005 6:03:58 PM

Unfortunately this is just another part of alleged market economic theory where the theory and the facts dont agree so the market theroists just reject the facts. You think Coyote has a great post? Do you honestly believe that retired temp workers running RV parks are the typical minium wage worker? In response to Mrs McMuffin you want to compare some mythical workd with what actually happened. Great idea, but in your comments you actually reveal that what matters in unemployment is that state of the overall economy NOT the pay level of individual workers. If you were really honest you'd admit that the real issue here is that if more money goes to wages, less goes to profits. I have no problem with an employer having an POV supporting their interest on that matter but they should be honest about it. If you look at the analysts discussion on Costco vs Walmart in the US you will see that prevailing wage rates and their impact on margins are what Wall Street sees. Can't you see that too?

Posted by: Matthew Holt | Apr 11, 2005 2:36:46 AM