Day By Day

Sunday, December 21, 2008

Minimum Wage

The debate has been raging ever since the Progressive Era -- does minimum wage legislation benefit the working class or harm it? Well, recently David Neumark and William L. Wascher undertook a massive study charting the effects of minimum wage laws. The results of their investigations?
Based on their comprehensive reading of the evidence, Neumark and Wascher argue that minimum wages do not achieve the main goals set forth by their supporters. They reduce employment opportunities for less-skilled workers and tend to reduce their earnings; they are not an effective means of reducing poverty; and they appear to have adverse longer-term effects on wages and earnings, in part by reducing the acquisition of human capital. The authors argue that policymakers should instead look for other tools to raise the wages of low-skill workers and to provide poor families with an acceptable standard of living.
Do tell!

The results are reported here.