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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: 4, Informative) by gawdonblue on Saturday May 19 2018, @01:31AM
The Fair Work Commission, not the Reserve Bank of Australia, is responsible for recommending the increases.
The RBA is Australia's central bank, responsible more than anything for keeping the country's economy going. The RBA board is full of government appointees - mostly business types - and is staffed by economists. They have previously identified how stagnant wages are harming the economy and are currently having the greatest negative impact on it. This new research was commissioned by the RBA to identify the impact to the economy of decent wage rises for those on minimum wages. It found no harm to employment and a net benefit to the economy, and the RBA presented this to the FWC, as they should.