Closing Republican message, checks notes, abolish the Federal Minimum Wage (user search)
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  Closing Republican message, checks notes, abolish the Federal Minimum Wage (search mode)
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Author Topic: Closing Republican message, checks notes, abolish the Federal Minimum Wage  (Read 1065 times)
McGovernForPrez
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« on: November 01, 2018, 01:52:14 PM »

Economists generally agree the minimum wage is silly and should be abolished. There does need to be something to replace it, though.

There's a theoretical argument to that effect, but in practice it is not at all clear that holds (it appears not to, which suggests that there may be something wrong with the theory, the main problem being that it is a fundamentally microeconomic argument, and the economy is a macroeconomy, not a microeconomy, and what may apply to a part does not necessarily apply to a whole):

https://www.nber.org/papers/w4509

Insofar as there is a potential problem with minimum wages, I would say it is more related to potentially increasing prices/inflation by raising labor costs, rather than reducing employment.

Minimum wages may also have some other positive side effects, such as stimulating technological change by giving firms more of a reason to adopt new production technologies that are more efficient/automated/capital-intensive and require less low-skilled labor.

I'm well aware of the minimum wage literature. You can find an empirical study showing just about whatever you want. Surveys of economists suggest a dim view on the minimum wage, for example: https://www.epionline.org/studies/survey-of-us-economists-on-a-15-federal-minimum-wage/

Most economists may be tepid about simply repealing the minimum wage without anything else in place, but almost all would leap at the chance to replace it with something better which eliminates the market distortions it generates.

You're also contradicting yourself a bit. Incentives to automate and substitute toward capital most certainly reduce employment until general equilibrium effects eventually set in.
You're completely misrepresenting the economic consensus on minimum wage. In general most economists support the idea of a minimum wage. It's a great tool in helping to counteract the effects of monopsony and the literature tends to show that this tends to outweigh the negatives such as increased unemployment and prices.

It is true however that economists tend not to support a blanket increase to 15 across the country. This makes sense considering the cost of living in San Francisco is much higher than in West Virginia. Generally minimum wage should be scaled to the cost of living in any given region. I would however argue that the current national minimum wage is probably too low. Plenty of Republican controlled states absolutely refuse to raise minimum wage to a reasonable level oftentimes trying to cut it instead.
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