Increasing the minimum wage | The Jackal

20 Nov 2011

Increasing the minimum wage

John Pagani writes about why we should raise the minimum wage:

How very interesting that Treasury believes that an increase in the minimum wage won't cost jobs. 
"We have evidence that has not been true in the past, so without new evidence the balance of probabilities is that a higher minimum wage does not generally lead to higher unemployment," the government's chief economic adviser says. 
Labour increased the minimum wage every year from 2000 to 2008 and unemployment dropped to its lowest level in decades. 
In my first year studying economics I remember my class being shocked when we were set a question along the lines of "Why doesn't unemployment increase when the minimum wage goes up?" We thought there had been a printing mistake. It turned out there is no conclusive evidence that when the minimum wage is increased jobs are lost, nor that they are created when it is decreased. 
Lots of economists have been trying to prove a link, because the first one to do so will win the Nobel Prize. But none have succeeded to the satisfaction of large numbers of other economists.

Increasing the minimum wage puts more money in peoples pockets thus they spend more and therefore more workers are required to provide services and items. This balances out any loss of jobs.

The obvious flip side to not increasing the minimum wage is that inequality increases... so there's another good reason to raise the minimum wage to at least $15 per hour.

It's not as if we could do any worse than National: