[Paleopsych] Wikipedia: Minimum wage

Premise Checker checker at panix.com
Wed Jan 12 15:29:27 UTC 2005

Wikipedia: Minimum wage

    The minimum wage is the minimum rate a [3]worker can legally be paid
    (usually per hour). Each country sets its own minimum wage laws and
    regulations, and many countries have no minimum wage.
    [4]1 History
    [5]2 Consequences of minimum wage laws

    [6]2.1 Hypothetical costs and benefits
    [7]2.2 Debate
    [8]2.3 Theoretical arguments
    [9]2.4 Wage subsidies
    [10]3 Worldwide minimum wages
    [11]4 Minimum wage in the United States
    [12]5 Minimum wage in the United Kingdom
    [13]6 See also
    [14]7 External links


    Minimum wage laws were first introduced in New Zealand. The chronology
    of moves to legislate minimum wages is as follows:
      * New Zealand in [16]1894
      * Australian state of Victoria in [17]1896
      * United Kingdom in [18]1909
      * United States, the state of Massachusetts in [19]1912

    In the [20]United States and other countries, minimum wage laws were a
    common demand of [21]labor unions.

Consequences of minimum wage laws

    If the law is successfully enforced, and if they are high enough in
    [23]real terms (or relative to the average wage), minimum wage laws
    are alleged to have various benefits and costs.

Hypothetical costs and benefits

    Minimum wages may have the effect of:
      * Reducing [25]low-paid work, which may be viewed as [26]unfair and
      * Reducing the dependency of the low-paid on [27]welfare-state
        benefits, which may in turn reduce [28]taxes or allow increases of
        other government outlays.
      * Stimulating economic growth by discouraging [29]labor-intensive
        industries, thereby encouraging more investment in capital and
      * Encouraging many of those who would normally take low-wage jobs to
        stay in (or return to) school and thus to accumulate [30]human

    On the other hand, minimum wages may have the effect of:
      * Discouraging employment of low-wage earners, and generally
        increasing [31]unemployment.
      * Raising employment barriers for people with little or no work
        experience or formal education: if a worker's labor is not worth
        the minimum, he may not find employment at all.
      * Curbing economic growth by increasing the cost of labor.
      * Increasing the price of goods and services, since employers pass
        on employment costs in the form of higher prices. (Opponents of
        minimum wage often see a [32]negative income tax, e.g., as a way
        to support the lower-waged jobs, with the money coming from those
        who pay taxes, not those who pay for the products including the
      * Decreasing incentive for some low-skilled workers to gain skills.
      * Where implemented locally, making labor more expensive than in
        other areas, which may discourage [33]inward investment and
        encourage local businesses to relocate their operations elsewhere.

    The effects of minimum wage laws, both positive and negative, may be
    increased by 'knock-on effects', with increased wages for workers
    already earning above the minimum wage. For example, some [34]labor
    union contracts are based on a fixed percentage or dollar amount above
    the minimum wage. Certain public grants or taxes are based on a
    multiple of the minimum wage. (For example, a worker may have an
    exemption if his earnings are below 2.5 minimum wages.)


    The costs and benefits arising from minimum wages are subject to
    considerable disagreement among [36]economists, though the consensus
    among economics textbooks is that minimum wage laws should be avoided
    whenever possible as the costs exceed the benefits. This unified view
    has been disputed by empirical research done by David Card and Alan
    Krueger. In their 1997 book Myth and Measurement: The New Economics of
    the Minimum Wage ([37]ISBN 0-691-04823-1), they found the negative
    employment effects of minimum-wage laws to be minimal if not
    non-existent (at least for the United States). For example, they look
    at the 1992 increase in New Jersey's minimum wage, the 1988 rise in
    California's minimum wage, and the 1990-91 increases in the federal
    minimum wage. In each case, Card and Kreuger present evidence
    ostensibly showing that increases in the minimum wage led to increases
    in pay, but no loss in jobs. That is, it appears that the demand for
    low-wage workers is [38]inelastic. Also, these authors reexamine the
    existing literature on the minimum wage and argue that it, too, lacks
    support for the claim that a higher minimum wage cuts the availability
    of jobs.

    Critics of this research, however, argue that their research was
    flawed.[39][1] (http://www.fee.org/vnews.php?nid=3896),[40][2]
    (http://www.cato.org/pubs/journal/cj15n1-8.html) For example, Card and
    Krueger gathered their data by telephoning employers in California and
    New Jersey, asking them whether they intended to increase, decrease,
    or or make no change in their employment. Subsequent attempts to
    verify the claims requested payroll cards from employers to verify
    employment, and ostensibly found that the minimum wage increases were
    followed by decreases in employment. On the other hand, data analysis
    by David Neumark and William Wascher, economists who are usually
    critical of minimum-wage increases, supported the Card/Krueger

    Some idea of the empirical problems of this debate can be seen by
    looking at recent trends in the United States. The minimum wage fell
    about 29% in [42]real terms between 1979 and 2003. This should have
    helped fight the problem of youth unemployment (since these workers
    are likely to have fewer skills than older workers). But young workers
    between the ages of 16 and 19 suffered from increased rates of
    unemployment (relative to those of workers 20 and older) than before
    this fall. Similarly, poverty rates in the United States ended their
    long-term decline after 1979. This suggests that critics of the
    minimum wage need to present a more complete theory of the origins of
    unemployment of young or poor people.

Theoretical arguments

    As is usual in serious social science, any empirical conclusion is
    subject to doubt and is simply the basis for further questions and
    research. One key question is the possible theoretical explanation of
    the different results.

    The traditional view that minimum wages have significant negative
    effects on employment typically assumes that labor markets for
    low-skill workers can be characterized as fitting the model of a
    [44]perfectly competitive market, where the only role of wages is as a
    cost. On the other hand, if Card and Krueger's empirical research is
    valid, it may be explained by the [45]efficiency wage hypothesis which
    states that higher wages may "pay for themselves" by increasing worker
    efficiency (i.e., labor productivity). Higher wages encourage a higher
    willingness of low-skill workers to stay with their current employers
    and to gain experience and skill, while the employers are more willing
    to train them. Alternatively, if [46]monopsony exists, then an
    increase in the minimum wage can raise employment. Alan Manning's 2003
    book, Monopsony in Motion: Imperfect Competition in Labor Markets
    ([47]ISBN 0691113122) suggests that this kind of market is common if
    not ubiquitous in labor markets.

    Even if Card and Krueger's results are accurate, there may be a
    "[48]tipping point" above which their conclusions do not apply and the
    standard economic consensus does apply. The possible validity of their
    research may be the result of political forces: in the United States,
    business political pressure on legislatures and Congress may have kept
    the minimum wage so low that it has little negative employment effect.
    Further, the Federal minimum wage has moved away from the presumed
    tipping point, becoming less relevant. It has fallen from about 50
    percent of the average hourly wage in manufacturing during the late
    1960s to less than 40 percent.

Wage subsidies

    If they exist, it is clear that some of the adverse effects can only
    occur when minimum wages are implemented and successfully enforced by
    government fiat: either these effects are a consequence of the costs
    of regulation (the consensus) or they do not exist (Card, Krueger, and
    others). If, however, a floor on wages is implemented indirectly by
    providing wage subsidies, there would not be decreased employment.
    However, since this program is not a "free lunch", some other economic
    damage may be created instead, as with an [50]externality. On the
    other hand, it is possible that there are already externalities
    contributing to unemployment, and that subsidies at the right level
    would merely be [51]Pigovian solutions to these and would not actually
    cause any further harm after all. Research would need to be done to
    determine this.

    While straightforward [52]Pigovian subsidies would have funding
    problems, particularly when introducing them for the first time, there
    are other approaches. One was examined by Professor [53]Kim Swales of
    the [54]University of Strathclyde (See [55][4]
    (http://www.faxfn.org/03_jobs.htm)). This avoids funding problems by
    not having an actual subsidy but a virtual one -- the funds flow is
    always from employers to the government, being netted off by the
    virtual subsidy before funds ever change hands. This may also be
    analysed by means of [56]game theory (e.g "the [57]prisoner's dilemma"
    or "the [58]tragedy of the commons").

    Alternatively, in the United States, many economists see the "earned
    income tax credit" (EITC, a wage subsidy) in the Federal income tax as
    providing the poverty-fighting benefits of the minimum wage without
    the non-budgetary costs, while being superior to most welfare state
    anti-poverty programs. One problem has been that many of the working
    poor (the target of this program) have a hard time with the tax forms
    needed to receive the EITC payment. There may also be long delays
    between when the money is needed and when the EITC payments are
    received. That is, a person might become eligible for the EITC in
    April but then get laid off for the rest of the year. But this person
    would not get help from the credit until nearly a year later (since
    Americans pay their taxes in April). Further, like with the minimum
    wage, those people working at home taking care of children and other
    loved ones do not receive any benefits; only those doing paid labor
    are rewarded.

    Finally, if these kinds of "complications" do not exist, it is
    possible that the benefit of the tax credit is received by the
    employer: assume that for low-skill workers the equilibrium market
    wage equals "X." Before the EITC is introduced, all of this wage is
    paid by their employers. After the EITC is instituted, the workers
    receive Y + Z, where Y is the new wage paid by employers and Z is the
    tax credit. If the labor market returns to the same equilibrium, then
    X = Y + Z. This means that the low-skill workers receive exactly the
    same amount as before the EITC was introduced and that the employer is
    paying less to the employees. This issue needs to examined further.

Worldwide minimum wages

    The list below gives the official minimum wage rates. Some countries
    are more effective than others at enforcing these laws, so that the
    effective minimum wage may be lower than the official one.
      * [60]Australia: [61]AUD 467.40 a week ([62]ACTU).
      * [63]Austria: none by law; it is instead set by an industrial
        collective agreement.
      * [64]Canada: set by each province; it varies from $5.90 per hour in
        [65]Alberta to $8.00 per hour in [66]British Columbia.
      * [67]Chile: 120,000 [68]Chilean pesos per month (about $200 [69]US
        dollars [70]as of October 2004) for those aged 18-65; 90,327
        Chilean pesos (about $150 US dollars) for those younger than 18
        and for those older than 65; and 78,050 Chilean pesos (about $130
        US dollars) for honorary payments.
      * [71]Belgium: 1186.00 [72]euros per month for private sector
        employees aged 21 or over (Eurostat 2004).
      * [73]Bulgaria: 61.00 euros per month (Eurostat 2004).
      * [74]Denmark: none by law; it is instead set by an industrial
        collective agreement.
      * [75]Finland: none by law; it is instead set by an industrial
        collective agreement.
      * [76]France: 7.61 euros per hour. 1154.18 euros per month
        (35h/week, 151.67 hours per month).
      * [77]Germany: none by law; it is instead set by an industrial
        collective agreement.
      * [78]Greece: 605.00 euros per month (Eurostat 2004).
      * [79]Hong Kong: no minimum wage.
      * [80]Hungary: 209.00 euros per month (Eurostat 2004).
      * [81]Italy: none by law; it is instead set by an industrial
        collective agreement.
      * [82]Republic of Ireland: 7.00 euros per hour.
      * [83]Luxemburg: 1403.00 euros per month (Eurostat 2004).
      * [84]Netherlands: 1249.20 euros per month plus 8% holiday
        allowance, summing to 1349.14 euros (the amount is less for those
        22 years old or younger).
      * [85]New Zealand: $[86]NZ 9.00 per hour for people 18 years old or
        older, and $NZ 7.20 per hour for those aged 16 or 17.
      * [87]Portugal: 356.60 euros per month.
      * [88]Poland: 180.00 euros per month (Eurostat 2004).
      * [89]Russia: 300 [90]rubles per month (slightly over $10 US
      * [91]Romania: 69.00 euros per month (Eurostat 2004).
      * [92]Spain: 451.20 euros per month.
      * [93]Sweden: none by law; it is instead set by an industrial
        collective agreement.
      * [94]Switzerland: none by law; it's normally 3000 CHF (~ 2000
        euros) set by collective agreements.
      * [95]Turkey: 245.00 [96]euros per month (Eurostat 2004).
      * [97]United Kingdom: £3.00 per hour for 16-to-17-year-olds who have
        finished compulsary education (except apprentices); £4.10 per hour
        for 18-to-21-year-olds; £4.85 per hour for 22-year-olds and above.
      * [98]United States: the federal minimum wage is $5.15 per hour,
        although workers under age 20 can be paid $4.25 an hour for their
        first 90 days. Some states also have minimum wage laws ranging
        from $2.00 in [99]Oklahoma (for some jobs not covered by the
        federal rate), to $7.16 an hour in [100]Washington. Some cities
        and counties have [101]living wage ordinances of up to $15.00 an
        hour although the groups of workers it applies to are often
        limited. (29 USC Sec. 206) (OK Statutes 40-197.5) (Revised Code of
        Washington Sec. 49.46.020) [102][5]


Minimum wage in the United States

    During his presidency, [104]Bill Clinton gave states the power to set
    minimum wages above the federal. 12 states have already done so, and
    the 2004 November ballot could increase that number. Floridians for
    All, a coalition consisting of [105]ACORN, unions, and progressive
    business leaders, was successful in proposing a Florida minimum wage
    of $6.15 an hour, adjusted yearly by inflation. Florida voters passed
    this state constitutional amendment in the election of November 2nd,

    See [106]List of U.S. state minimum wages.

Minimum wage in the United Kingdom

    Municipal regulation of wage levels began in some towns in 1524.
    Later, the Trade Boards Act of 1918 made a large number of trades
    subject to minimum wages (which varied from trade to trade). These
    rules were repealed during the Thatcher era. A national minimum wage
    was introduced for the first time by Tony Blair's Labour government.

    See [108]National Minimum Wage Act.

See also

      * [110]Maximum wage
      * [111]Social wage
      * [112]Living wage
      * [113]Wage slave
      * [114]Labor market
      * [115]Garcia v. San Antonio Metropolitan Transit Authority


External links

      * [117]The Economic Policy Institute
      * [118]Floridians for All (http://www.floridiansforall.org)
      * [119]AFL-CIO Guide to State Minimum Wages
      * [120]UK Department of Trade and Industry

    Minimum Wage is also the name of a 42-second song by the
    [121]alternative rock duo [122]They Might Be Giants.


    3. http://en.wikipedia.org/wiki/Worker
    4. http://en.wikipedia.org/wiki/Minimum_wage#History
    5. http://en.wikipedia.org/wiki/Minimum_wage#Consequences_of_minimum_wage_laws
    6. http://en.wikipedia.org/wiki/Minimum_wage#Hypothetical_costs_and_benefits
    7. http://en.wikipedia.org/wiki/Minimum_wage#Debate
    8. http://en.wikipedia.org/wiki/Minimum_wage#Theoretical_arguments
    9. http://en.wikipedia.org/wiki/Minimum_wage#Wage_subsidies
   10. http://en.wikipedia.org/wiki/Minimum_wage#Worldwide_minimum_wages
   11. http://en.wikipedia.org/wiki/Minimum_wage#Minimum_wage_in_the_United_States
   12. http://en.wikipedia.org/wiki/Minimum_wage#Minimum_wage_in_the_United_Kingdom
   13. http://en.wikipedia.org/wiki/Minimum_wage#See_also
   14. http://en.wikipedia.org/wiki/Minimum_wage#External_links
   15. http://en.wikipedia.org/w/wiki.phtml?title=Minimum_wage&action=edit&section=1
   16. http://en.wikipedia.org/wiki/1894
   17. http://en.wikipedia.org/wiki/1896
   18. http://en.wikipedia.org/wiki/1909
   19. http://en.wikipedia.org/wiki/1912
   20. http://en.wikipedia.org/wiki/United_States
   21. http://en.wikipedia.org/wiki/Labor_union
   22. http://en.wikipedia.org/w/wiki.phtml?title=Minimum_wage&action=edit&section=2
   23. http://en.wikipedia.org/wiki/Real_vs._nominal_in_economics
   24. http://en.wikipedia.org/w/wiki.phtml?title=Minimum_wage&action=edit&section=3
   25. http://en.wikipedia.org/wiki/Wage_slave
   26. http://en.wikipedia.org/wiki/Exploitation
   27. http://en.wikipedia.org/wiki/Welfare
   28. http://en.wikipedia.org/wiki/Tax
   29. http://en.wikipedia.org/w/wiki.phtml?title=Labor-intensive&action=edit
   30. http://en.wikipedia.org/wiki/Human_capital
   31. http://en.wikipedia.org/wiki/Unemployment
   32. http://en.wikipedia.org/wiki/Negative_income_tax
   33. http://en.wikipedia.org/wiki/Inward_investment
   34. http://en.wikipedia.org/wiki/Labor_union
   35. http://en.wikipedia.org/w/wiki.phtml?title=Minimum_wage&action=edit&section=4
   36. http://en.wikipedia.org/wiki/Economist
   37. http://en.wikipedia.org/w/wiki.phtml?title=Special:Booksources&isbn=0691048231
   38. http://en.wikipedia.org/wiki/Elasticity
   39. http://www.fee.org/vnews.php?nid=3896
   40. http://www.cato.org/pubs/journal/cj15n1-8.html
   41. http://www.epinet.org/briefingpapers/minimumw_bp_1996.pdf
   42. http://en.wikipedia.org/wiki/Real_vs._nominal_in_economics
   43. http://en.wikipedia.org/w/wiki.phtml?title=Minimum_wage&action=edit&section=5
   44. http://en.wikipedia.org/wiki/Perfect_competition
   45. http://en.wikipedia.org/wiki/Efficiency_wage_hypothesis
   46. http://en.wikipedia.org/wiki/Monopsony
   47. http://en.wikipedia.org/w/wiki.phtml?title=Special:Booksources&isbn=0691113122
   48. http://en.wikipedia.org/wiki/Tipping_point
   49. http://en.wikipedia.org/w/wiki.phtml?title=Minimum_wage&action=edit&section=6
   50. http://en.wikipedia.org/wiki/Externality
   51. http://en.wikipedia.org/wiki/Arthur_Cecil_Pigou
   52. http://en.wikipedia.org/wiki/Arthur_Cecil_Pigou
   53. http://en.wikipedia.org/wiki/Kim_Swales
   54. http://en.wikipedia.org/wiki/University_of_Strathclyde
   55. http://www.faxfn.org/03_jobs.htm
   56. http://en.wikipedia.org/wiki/Game_theory
   57. http://en.wikipedia.org/wiki/Prisoner%27s_dilemma
   58. http://en.wikipedia.org/wiki/Tragedy_of_the_commons
   59. http://en.wikipedia.org/w/wiki.phtml?title=Minimum_wage&action=edit&section=7
   60. http://en.wikipedia.org/wiki/Australia
   61. http://en.wikipedia.org/wiki/AUD
   62. http://en.wikipedia.org/wiki/Australian_Council_of_Trade_Unions
   63. http://en.wikipedia.org/wiki/Austria
   64. http://en.wikipedia.org/wiki/Canada
   65. http://en.wikipedia.org/wiki/Alberta
   66. http://en.wikipedia.org/wiki/British_Columbia
   67. http://en.wikipedia.org/wiki/Chile
   68. http://en.wikipedia.org/wiki/Chilean_peso
   69. http://en.wikipedia.org/wiki/US_dollar
   70. http://en.wikipedia.org/wiki/As_of_October_2004
   71. http://en.wikipedia.org/wiki/Belgium
   72. http://en.wikipedia.org/wiki/Euro
   73. http://en.wikipedia.org/wiki/Bulgaria
   74. http://en.wikipedia.org/wiki/Denmark
   75. http://en.wikipedia.org/wiki/Finland
   76. http://en.wikipedia.org/wiki/France
   77. http://en.wikipedia.org/wiki/Germany
   78. http://en.wikipedia.org/wiki/Greece
   79. http://en.wikipedia.org/wiki/Hong_Kong
   80. http://en.wikipedia.org/wiki/Hungary
   81. http://en.wikipedia.org/wiki/Italy
   82. http://en.wikipedia.org/wiki/Republic_of_Ireland
   83. http://en.wikipedia.org/wiki/Luxemburg
   84. http://en.wikipedia.org/wiki/Netherlands
   85. http://en.wikipedia.org/wiki/New_Zealand
   86. http://en.wikipedia.org/wiki/NZD
   87. http://en.wikipedia.org/wiki/Portugal
   88. http://en.wikipedia.org/wiki/Poland
   89. http://en.wikipedia.org/wiki/Russia
   90. http://en.wikipedia.org/wiki/Ruble
   91. http://en.wikipedia.org/wiki/Romania
   92. http://en.wikipedia.org/wiki/Spain
   93. http://en.wikipedia.org/wiki/Sweden
   94. http://en.wikipedia.org/wiki/Switzerland
   95. http://en.wikipedia.org/wiki/Turkey
   96. http://en.wikipedia.org/wiki/Euro
   97. http://en.wikipedia.org/wiki/United_Kingdom
   98. http://en.wikipedia.org/wiki/United_States
   99. http://en.wikipedia.org/wiki/Oklahoma
  100. http://en.wikipedia.org/wiki/Washington
  101. http://en.wikipedia.org/wiki/Living_wage
  102. http://www.lni.wa.gov/WorkplaceRights/Wages/Minimum/default.asp
  103. http://en.wikipedia.org/w/wiki.phtml?title=Minimum_wage&action=edit&section=8
  104. http://en.wikipedia.org/wiki/Bill_Clinton
  105. http://en.wikipedia.org/wiki/ACORN
  106. http://en.wikipedia.org/wiki/List_of_U.S._state_minimum_wages
  107. http://en.wikipedia.org/w/wiki.phtml?title=Minimum_wage&action=edit&section=9
  108. http://en.wikipedia.org/wiki/National_Minimum_Wage_Act
  109. http://en.wikipedia.org/w/wiki.phtml?title=Minimum_wage&action=edit&section=10
  110. http://en.wikipedia.org/wiki/Maximum_wage
  111. http://en.wikipedia.org/w/wiki.phtml?title=Social_wage&action=edit
  112. http://en.wikipedia.org/wiki/Living_wage
  113. http://en.wikipedia.org/wiki/Wage_slave
  114. http://en.wikipedia.org/wiki/Labor_market
  115. http://en.wikipedia.org/wiki/Garcia_v._San_Antonio_Metropolitan_Transit_Authority
  116. http://en.wikipedia.org/w/wiki.phtml?title=Minimum_wage&action=edit&section=11
  117. http://www.epinet.org/content.cfm/issueguides_minwage_minwage
  118. http://www.floridiansforall.org/
  119. http://www.aflcio.org/yourjobeconomy/minimumwage/staterates.cfm
  120. http://www.dti.gov.uk/er/nmw/
  121. http://en.wikipedia.org/wiki/Alternative_rock
  122. http://en.wikipedia.org/wiki/They_Might_Be_Giants

More information about the paleopsych mailing list