Pay workers more, feel economic pain
- March 7, 2012
- Research by David Neumark, economics Chancellor's Professor and Center for Economics & Public Policy director, is featured in the New York Daily News March 7, 2012
From the New York Daily News:
Like many misleading arguments, this one begins with a grain of truth. A team of economists at the Federal Reserve Bank of Chicago found that minimum-wage increases were associated with a temporary spending boost in households with an adult earning the minimum wage. This boost was primarily the result of debt-financed purchases of cars and trucks.... If raising the minimum wage is an effective way to stimulate employment and economic growth, why not just raise the current state minimum wage to $20 or even $200 an hour? The reason, of course, is that the cost of the raise has to be paid by someone.... The labor costs imposed by rising minimum wages will lead employers to reduce employment and hours of many vulnerable low-skilled workers, often those who are less educated and less experienced. A recent comprehensive review of two decades of economic literature by David Neumark (University of California, Irvine) and William Wascher (Federal Reserve Board) suggests that a 10 percent increase in the minimum wage reduces employment among the least skilled by 1 percent to 2 percent.
For the full story, please visit http://www.nydailynews.com/opinion/pay-workers-feel-economic-pain-articl....