Mises.org Media Feed
- Daniel McCarthy on the Libertarian and Conservative Divide
- The Market for Security vs. the Clown World of Civil Rights
- The Inflation Reduction Act: Another Unfair and Unjustified State Intervention
- Five Keys to Professional and Personal Development
- Molinari Explains the Difference between Monarchy and Popular Government
“An important early volley was the (in)famous Card-Krueger 1994 paper, which looked at the case of New Jersey and Pennsylvania and concluded that, if anything, New Jersey’s state-level minimum wage hike increased employment in fast-food restaurants.”
We can also increase employment by having people dig holes with spoons instead of shovels or getting rid of some of the machinery that makes labor more productive. So, we’re not just concerned with the number of unemployed.
Anticipating an objection, reducing the Minimum Wage to zero (which I think is the right and most beneficial thing to do) would also, all other things being equal, reduce the standard of living as compared with what their politically advantaged wage would be under a higher Minimum Wage. Both policies reduce the standard of living of some and not others if we’re comparing the two policies with each other, but the difference is that, without a Minimum Wage nobody is forced to work for the benefit of another against his will, and the profit motive promotes the introduction of many, creative, and flexible opportunities for income to recover from losses one may take without the so-called “protections” of a Minimum Wage.
Australia has an unusually high minimum wage … in round numbers sitting at $20 AUD which is approx $15 USD. But in addition Australia has a complex system of industry award wages that might take precedence over minimum wage, depending on many regulatory details, and are always higher than minimum wage … as well as being confusing for most business owners.
https://fred.stlouisfed.org/graph/fredgraph.png?g=BPao
You can see that there was a big change starting around 2007 where Australia managed to get ahead of the USA in terms of Employment Rate over the prime age population. Coincidentally a bunch of things happened at that time, with the USA getting a much bigger hit from the 2008/2009 GFC than Australia did. There was also a resources boom starting roughly when the Copper price started to soar in early 2006 (many people trust Copper as a general purpose indicator, hence the honorary rhyming PhD). In addition the shift in manufacturing over to China probably assisted Australia in terms of bigger markets for minerals and agriculture … it is of course difficult to disentangle the various factors.