Low margin businesses fundamentally operate by exploiting low paid workers. What's wrong with making the playing field even by taxing them? The prices of food will go up, but that's okay. We do it here in Australia and nobody is crying over having to pay 12 AUD for McDonald's vs 9 AUD in the US.
Yes according to classical economics it'd result in a decrease in demand. But the reality is that these shops need the workers regardless. Moreover with a minimum wage people have more disposable income to spend at these shops, which can sometimes create more jobs than the increased salary destroyed.
Most studies that have been done on minimum wage found no correlation to unemployment rate. The economics you learned in high school can rarely be applied perfectly to reality. There are plenty of countries with minimum wages with no significantly different unemployment rates in the service industries.
Pretty much all changes in minimum wages are small.
This makes it very hard to measure the effect with any precision. You have to remember that wages are not 100% of the compensation for employees. So if MW increases from $10 to $10:50, fringe benefits may be cut from $2 to $1:50, and you end up with no measurable effect.
> But the reality is that these shops need the workers regardless.
If their expenses become higher than their earnings, the shops will close. Maybe that at least is an economic fact we can agree on?
Then why not implement it that way? Make the minimum wage small and bump it up a bit ahead of inflation every year. If things go south (this hasn't happened in any other country that has done it) it can always be reversed.
For what it's worth, here in Australia there's only around 10% less McDonald's stores per capita to the US, despite a $20 minimum wage. All these workers can afford to eat and live in some of the most expensive cities in the world and the country isn't collapsing under unemployment.
You might miss my point. I'm saying MW does hurt low skilled workers quite a lot, but adjusting it for inflation every few years doesn't make it worse.
If I was emperor, abolishing MW would be my first and most obvious reform to help the poor.
> All these workers can afford to eat and live...
But the problem is the people who can't get work because on MW!
>I'm saying MW does hurt low skilled workers quite a lot
Citation needed. In fact, I did a quick Google search and found out that several US cities/states have increased minimum wage this year and they've seen NO significant job losses. In fact, in some cases these states have seen more growth in low-income jobs than states with lower minimum wages.
Minimum wage takes money out of the pockets of the rich and puts it in the pockets of the poor. Half the time the rich people would have spent this money on luxury goods instead of spending this money on everyday things anyway. As such, in many cases you end up seeing increases (or at least no impact) in the numbers of low wage jobs because of the increase in demand of the products of said workers.
> If their expenses become higher than their earnings, the shops will close. Maybe that at least is an economic fact we can agree on?
Or they could raise their prices. That’s what normally happens in my experience when a small business faces an unavoidable and significant increase in one of its input costs.
I'm fascinated that people honestly think that increasing the minimum wage will result in a large amount of job loss. Here's a thread from last month on a story about why this isn't true. A comment from jjoonathan links to an interesting study about how jobs negatively affected by minimum wage increases are disproportionately reported on when compared to jobs benefited by minimum wage increases.
You think the countries with minimum wages don't have these mom and pop shops? Hint: I live in such a country, and they're doing just fine. The prices are higher across the board, including the prices they sell their products for. The margin shifts, it doesn't disappear.
Sure, and there's nothing stopping your country from doing the same. I mean healthcare is basically irrelevant since minimum wage workers can't afford to look after health conditions regardless of whether or not they have a job. Regardless, there's no observed correlation between minimum wage and unemployment if that's what you're getting at.
What about all the many years before 2014 that the US unemployment rate was significantly more than almost all of the European countries? Did the lack of minimum wage help in 2010 when the unemployment rate was 10%?
Also, that's a flat out lie. Greece, Spain, and Italy are pulling up the average with their huge unemployment rates, and the vast majority of unemployment rates besides that are almost the same as the US and in some cases lower.
I'm assuming you mean than the US. The Netherlands, Hungary, Poland, Malta, Germany and Czech Republic aren't in the EU? Last time I checked they were.
Germany and the Netherlands have some of the highest minimum wages in the world, and yet they have unemployment rates that are lower than the US.
Moreover, your claim was that most of the countries have twice the unemployment rate of the US. Your very own source shows that only 5 of the 28 nations have double or more, and less than half have an unemployment rate 50% greater than the US. Are you going to admit to your lie or are you going to change the story?
