The Effect of the Minimum Wage

What happens if you raise the minimum wage? Some economic analysis of the idea and its arguments.

1. “Productivity has increased faster than minimum wage”: average productivity≠ average productivity
2. “Other places have much higher minimum wages”: They also have higher costs. Australia’s famously high minimum wage is just over $10/hr, comparing “purchasing power parity”.
3. “Help the poor”: Most minimum wage earners are not in poverty. They are the second earner in the household. Raising minimum wages makes it illegal to productively hire the young and unskilled, blocking their access to that first job, keeping them from improving their skills. This disproportionately hurts poor and minorities.

The minimum wage was first intended to keep blacks from competing with whites. It continues to have that effect.

(Apr’16) FEE: From 1974 to 1983 Puerto Rico implemented a minimum wage 2/3 the average wage.

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