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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: 1) by khallow on Saturday May 19 2018, @10:21AM
And it happens to be true. That results in a huge level of economic growth and well-being of the populace. China is a great example of what happens when you have a long stretch of capitalist growth. But of course, there are problems with that. One of those is the growth of inefficiency and waste. That's where those downturns have advantage. The inevitable downturns allow us to restructure our economies and societies in a distributed manner rather than top-down fiat.
Marxists have them as well and deal with them in a far worse manner. More effort is spent on seeking and blaming "Reactionaries" than on processes that fix what went wrong. In other words, the biggest reactionaries in a Marxist revolution are the Marxists themselves via idiotic outlook and policy.
Ultimately, a stable society that never has downturns is a stagnant society. There's a deep irony in desiring a huge, radical revolution merely to create a society that never changes. And I think no such attempt can ever be successful in the long run. The more stable you try to make your society, in addition to the pain you cause to its citizens, the more fragile you make that society. The downturns will come eventually, they just will be more severe and destructive when they occur. It is better to have the periodic downturns of capitalism than near destruction.