Labor & Economic News Blog

Wednesday, September 11, 2013

The minimum-wage muddle

The minimum-wage muddle
We’re now engaged in another divisive debate over the minimum wage and its offspring, the “living wage.” We’ve been here before, because both sides seem to have strong arguments. On the one hand, raising wages by government fiat seems a job-killer. Economics 101 teaches us that if you increase the price of something — including labor — people will buy less of it. On the other hand, guaranteeing that full-time work protects against poverty seems a decent standard. The present federal minimum ($7.25 an hour) doesn’t do this. At 40 hours a week, it amounts to $15,080 a year; that’s above the government’s poverty-line for a single person ($11,702 in 2011) but not for a family of four ($22,811).


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