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An article in Australian newspaper The Age describes a paper just released by the Reserve Bank of Australia which has found that periodic increases in the Minimum Wage (also known as the "Award" wage in Australia) did not negatively affect the level of employment in each respective industry:
The paper, published by the central bank's economic research department on the final day the Fair Work Commission hearings had to decide if 2.3 million Australians will get a pay rise in July, found "no evidence that small, incremental increases in award wages had an adverse effect on hours worked or the job destruction rate".
It used a sample of 32,000 jobs between 1998 and 2008, when award wages were increased by a flat dollar amount each year, to find jobs with larger award wage rises had larger increases in hours worked than jobs experiencing a smaller award wage rise.
"I am able to rule out adverse effects on hours worked. I also find that award wage increases do not have a statistically significant effect on the job destruction rate," said researcher James Bishop.
"If anything, the point estimates suggest that the job destruction rate actually declines when the award wage is increased."
[...] The RBA paper said their results may not "necessarily generalise to large, unanticipated changes in award wages", cautioned it only included adult positions, and that the consequences of wage increases may "be borne by job seekers, rather than job holders".
"There will always be some point at which a minimum wage adjustment will begin to reduce employment," the paper stated.
Naturally, this is proving problematic for some politicians who have been advocating against increases in the minimum wage due to fears that this will harm business.
Link to Abstract and Paper (pdf).
(Score: 3, Insightful) by bradley13 on Friday May 18 2018, @06:32AM (4 children)
As another poster says: The period examined was a period of strong economic growth. Jobs were hard to fill, employers were willing and able to pay more - so small increases in minimum wage had no effect.
Here in Switzerland, outside of certain union contracts, we have no minimum wage. You could easily impose one of, say, Fr. 18/hour. No problem at all - because to fill any job, including flipping hamburgers at McDonalds, employers already have to pay more than that.
Note that even TFA quotes the paper as saying: ""There will always be some point at which a minimum wage adjustment will begin to reduce employment." That point is the level at which the wage is higher that the value of the job to the employer. As long as the minimum wage is below that level, it is harmless (and irrelevant). Push it above that level, and it will reduce employment.
It's really that simple.
Everyone is somebody else's weirdo.
(Score: 4, Informative) by sjames on Friday May 18 2018, @07:11AM (1 child)
The study in TFA shows that the tipping point is higher than that.
(Score: 2, Interesting) by Anonymous Coward on Friday May 18 2018, @08:09AM
Not necessarily. It shows that the value to the employer is more than what they can get away with paying for it. Employers are greedy bastards, they won't tell you how much your job is really worth to them because then you'd start demanding to be paid that.
(Score: 0) by Anonymous Coward on Friday May 18 2018, @12:31PM
if only we all had access to nazi gold like the swiss... it's really that simple.
(Score: 0) by Anonymous Coward on Saturday May 19 2018, @03:20AM
If you look at Seattle you will see the effects of going too far on the lower wage market.