Minimum wage sandbox
Hmm. I did a search to see if I’ve written anything about the minimum wage here on CBA, and all I came up with was a little mention of it during the presidential debate liveblogging I did back in October.
Allow me to briefly summarize my thoughts on the minimum wage: it’s bad. I oppose the minimum wage in all forms, and I’m against all increases, whether tied to inflation or not. It’s my secret hope that the minimum wage will never be raised again and will slowly die by way of inflation.
There are many strong, compassionate arguments for opposing a minimum wage, or at the very least, halting any increase in the minimum wage for the forseeable future. I don’t have the time or inclination to elaborate on them now. I’m not a big meanie, and I don’t own a business or even shares in one. Despite my strong opinions, it’s not a topic I’m particularly interested in at the moment; I only told you how I feel about it so you’d understand this next sentence a little better.
I really, really hope that Madison Wisconsin wins their court case. Madison has enacted a city wide minimum wage increase. Various businesses are taking the city to court to try to stop the increase from taking effect. For now, it looks like the increase is going to go through while the suit is in progress.
Why would I want a minimum wage increase in Madison even though I just said that I would never want a minimum wage increase? Simple: this would be a perfect empirical test of minimum wage theories. Let’s see how much the unemployment rate is affected by hikes in the minimum wage. By mid-2007, when the minimum wage would be at least $7.25 an hour, we should really see some results. If unemployment stays the same or goes down in Madison relative to the immediately surrounding area, I’ll eat my hat. Heck, I’ll buy another one and eat that too.
Furthermore, this is all happening in Wisconsin, which I don’t even like, in a city that’s far away from where I live. If people want to screw their local economies, serves them right. And if this case sets a precedent and St. Paul starts hiking the minimum wage, hey, it serves me right. No use in me championing an overall power shift to local governments and then whining when they pass bad laws, right? I’d be more than happy abolishing the federal minimum wage and replacing it with many local laws all across the country. Of course, that’s not going to happen as long as a majority of Congress thinks they’d lose more votes than gain by it.
(Aside: one unintended consequence of Madison prevailing might be some software breakage. Any software which assumes that minimum wage is going to be the same all across the nation is in for some trouble…)
January 7th, 2005 at 1:57 pm
Re software: Minimum wage isn’t the same across the nation. If you look here you’ll see that there are a number of states with minimum wages higher than the federal rate. And there are some that are lower, which I didn’t realize was possible.
January 7th, 2005 at 4:18 pm
Hmm, okay, you’re right, minimum wage rates are different all over the country. But I still hate Wisconsin. ;)
As an explanation for how some states have lower minimum wage rates, several of the detailed entries on the page include this disclaimer: “The State law excludes from coverage any employment that is subject to the Federal Fair Labor Standards Act.”
I’m assuming that means that the federal unemployment rate applies if the employee meets whatever federal requirements there are to actually be an employee. Otherwise, it’s up to the states. I bet things like, family businesses, farms, etc, have exemptions in the federal employee standards.
The reason why I’m interested in all of this is that I like the idea of being able to compare the societal effects of different minimum wage rates.
Here’s an example of using real world examples to test theories. (Alas I can’t find the link to the original page, so I’m going to have to go on memory.) Current globalization theory says that rich countries are exploiting the poorer countries and getting rich off their backs. We have way more money, resources, and power than those other countries, and therefore we should help them out by giving them money, resources, and power instead of capitalistically exploiting them through “trade”. Poorer countries must be protected from us, the theory goes, otherwise they’ll remain poor forever.
Do we have any examples in the past of similar wealth imbalances? Why, of course! When the U.S. was started, there was a huge wealth imbalance. The north had, if I recall correctly, upwards of 80 to 90 percent of all of the money, machines, everything. If anti-globalization theory is correct, then 200 years later, you’d expect the wealth gap between north and south to have greatly increased. Southern states should be living in grinding poverty, while people in the north live a life of ease, all built on the profit of others.
But that’s exactly what *didn’t* happen. The south, taken as a whole, isn’t significantly better or worse off than the north, or the midwest, or the western states. States were effectively banned from erecting trade barriers by the constitution, so there was plenty of free trade going around, unlike all of the tarrifs and trade barriers which countries erect between themselves.
Furthermore, the south has not gotten rich at the expense of the north. Everyone in the US is better off than they were 200 years ago.