My point is, that employers have a rate at which they are willing to employ people. If you raise the rate at which they are able to employ, this action will price people out of a job.kokodamonkey said:<-- erm what?
eg. My labour might have only been worth $5/hr, and if the minimum wage is raised to $6/hr, then I may no longer have a job.
So while it's possible that the people who weren't priced out of a job benefit, this only comes at the cost of the people who now no longer have a job!
There are also other issues involved like the idea that employees don't necessarily benefit anyway, because employers sometimes respond to minimum wage rises by just taking out other benefits or reducing the quality of on the job training.
Then there's also the issue of where you would otherwise have two willing parties who aren't allowed to go through with a transaction because of government regulation. This goes against economic freedoms and so it's wrong.
I think merit pay could be workable, so let's see what you've got against it then.kokodamonkey said:Merit pay wouldnt work with teaching and thats common sense, i can go into more details if you want.
I said the employers would otherwise have this money, and there's no reason to say they wouldn't be spending it too!kokodamonkey said:more wages in terms of wage growth? -> Wages Increase -> Business Costs go up -> Cost passed onto end consumer with rise in prices -> General Inflation increase -> Offsets the original wage increase -> Wage Increase Demanded.. Economics is a circle btw.
So I don't think it's relevant to say that "it's better for the economy that the workers have the money that would otherwise be owned by the employers".
Not only that, but their methodology has also been questioned.Sparcod said:Yeh, this argument is in one of my economics textbooks. The guys are called David Card and Alan Krueger and they're from California.
They've been quite criticised for supporting the living wage because it causes inflation (due to increased demand).
Check out: "A Reexamination of Card and Krueger’s State-Level Study of the Minimum Wage" by Walter J. Wessels JOURNAL OF LABOR RESEARCH
Volume XXVIII, Number 1 Winter 2007. Basically, this guy uses a similar look at minimum wages, but this time he did it on USA 95-96 min wage hike (as opposed to the earlier one studied by Card and Krueger) and this time around, he found a significant negative effect on employment.
It comes as no surprise really, I think the explanation for the 'switch' in findings is that later on the actual change in employment was more discernible.