Yesterday, a co-worker shared a Guardian long read on minimum wages. I responded with some comments on Twitter. I am reproducing it here.
- If indeed a monopsony among buyers of labour is the root cause of low wages, then the minimum wage does absolutely nothing to solve that. In fact, by raising the cost of doing business, it drives away more firms/reduces their hiring & further exacerbates the monopsony problem.
- The debate on minimum wage is not one of pro-business and anti-business. There are some big companies like Walmart who support it because it can help drive out competitors (small mom and pop stores) who can’t afford to pay the artificially high wages.
- The author writes that he spoke to the low income workers affected by the minimum wage hikes: “In all of these conversations, people talked about the higher minimum wage with palpable pride and enthusiasm.” Well, it is extremely unfair to not express the opinions of those workers who are simply unable to find work because of the increased minimum wages. These people are the ones with the least education, the least skills and the most disadvantage.
The debate then seems to become- should we, with higher minimum wages, try to improve the lives of the struggling poor at the expense of those struggling even more?