I?ve been watching the political rhetoric on the Fight for $15 an hour minimum wage with some glee just recently. For I?ve been saying for a couple of years now that that rate is simply way, waaay, too high. But while the fight was small and relatively unorganised there were plenty further to the left of me urging it on. And deploying all sorts of rhetoric. We?ve had absurdities like people insisting that if Walmart pays higher wages then Walmart?s profits will rise: an absurdity because of course Walmart actually does pay people money for the things that it sells. Wages come out of the gross profit left after doing that: and there?s no way at all that increased spending by Walmart workers at Walmart can produce higher profits when there is that cost of goods to take into account. But it was a useful story to gee up the crowds while the campaign rolled on. I?m also absolutely certain that I?ve read Robert Reich saying that $15 wasn?t actually the goal: it was a negotiating technique. Ask for what you know you won?t get and get knocked back to something you will accept (could be my memory though, I cannot now find that piece but I didn?t search all that hard).
Now that it looks like $15 might actually be an achievable goal there?s an awful lot of backpedaling going on among the adults. The likes of Jared Bernstein and so on, those who do actually know their economics even if we might all disagree about what shape society should take, tend to be muttering and staring at their shoes when asked about whether $15 is a good idea. Well, you know, maybe $12 and future indexation or something might be a better idea?
And Noah Smith is quite right, as I?ve already said, that perhaps the most interesting result of all of this is going to be the research papers we get in a few years time. Really being able to look at the effects of a substantial minimum wage increase. For the best research we?ve got so far is that modest increases don?t do very much, with the preponderance of such studies stating that while there are bad effects they?re modest, just like the wage rises.
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