Will President Obama's desire to increase the federal minimum wage to the whopping figure of $9/hour be a setback for the low-skilled labor market? Investors seem
to think so, but are they simply misinformed?
A 2011 study passed along
by Business Insider
looked at recent historical data on the effects of an increase in the minimum wage (as opposed to mere economic theory on its effects), and found that employers didn't in fact reduce their workforce when faced with it, which'd be the expected result of a move that raises the price of labor. Instead, it found that businesses opted to increase workers' performance standards, reduce food and energy waste, and creatively juggle work schedules among other cost absorption strategies.
"We find no significant effect of the minimum wage increases on employment or hours over
the years [studied]," the Georgia State University authors conclude.
But while employment itself may not be at risk, one might conclude that the work experience could suffer. "Increasing performance standards" reads a bit like a euphemism for "squeezing more blood from a stone," does it not? The question then becomes: Would you rather work hard, or hardly work?
Via Business Insider