Wages of min
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â€śYou canâ€™t turn a virtual corner this week without tripping over a discussion about the US minimum wage,â€ťÂ Cardiff GarciaÂ writes in a rather comprehensive round-up of the issue. You can addÂ President ObamaÂ to Garciaâ€™s list of people whoâ€™ve tackled this topic lately — not to mention the thousands ofÂ fast food workersÂ who went on strike this week asking for higher wages. â€śThereâ€™s no solid evidence that a higher minimum wage costs jobs, and research shows it raises incomes for low-wage workers and boosts short-term economic growth,â€ť Obama said.
Ezra KleinÂ said Obamaâ€™s speech was the presidentâ€™s best to date on the economy. The focus was income inequality, but Obama also spent time taking on some of the arguments against raising the Federal minimum wage, which is currentlyÂ $7.25 an hour. In many areas of the country, thatâ€™s well below whatâ€™s considered a living wage; MIT has aÂ nice calculatorÂ showing living wages compared to minimum wages by county.
Garcia argues that we actually donâ€™t know if raising the minimum wage is a good idea. Not raising the minimum wage, he writes, makes the poor much more likely to need government benefits, costs which would ultimately be passed on to taxpayers. On the other hand, he writes, some research has found that raising the minimum wage can, in fact, lead to lower employment.
Dylan MatthewsÂ runs through a battery of studies on minimum wage hikes, and finds that thereâ€™s little research to suggest thereâ€™s much economic stimulus to be found in raising the minimum wage. Garcia, like Matthews, thinks the minimum wage just isnâ€™t that efficient at fighting inequality. A â€średistributive, post-outcome transfer mechanism would probably be better than a minimum wage hike,â€ť he writes.
Allison SchragerÂ argues that itâ€™s wrong, asÂ Paul KrugmanÂ asserts, to say raising the minimum wage has no effect on employment. Thereâ€™s considerable disagreement on that point among experts, she says, and importantly, their views are based on studies of small increases in the minimum wage. There just isnâ€™t enough data on the job market impact of large hikes in the minimum wage, like the one recently implemented in aÂ Seattle suburb.
Last year,Â David LeonhardtÂ said that while raising the federal minimum wage would help curb inequality, itâ€™s probably not one of the bigger causes of inequalityâ€™sÂ rapid riseÂ in the last few decades. Taking into account local and state increases, the effective minimum wage has outpaced inflation by 10% since 1990. In 2012, only 60% of the population was affected by the Federal minimum wage, Leonhardt writes. That number could continue to fall if aÂ wave of local campaignsÂ are successful.Â – Ben Walsh and Ryan McCarthy
On to todayâ€™s links: