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Friedman was right - a minimum wage destroys jobs

And here's the evidence from the sharp end, care of the Arizona Republic:

"..[Arizona's] new minimum-wage law...went into effect last month. Some Valley employers, especially those in the food industry, say payroll budgets have risen so much that they're cutting hours, instituting hiring freezes and laying off employees. And teens are among the first workers to go. Companies maintain the new wage was raised to $6.75 per hour from $5.15 per hour to help the breadwinners in working-poor families. Teens typically have other means of support. Mark Messner, owner of Pepi's Pizza in south Phoenix, estimates he has employed more than 2,000 high school students since 1990. But he plans to lay off three teenage workers and decrease hours worked by others. Of his 25-person workforce, roughly 75 percent are in high school. "I've had to go to some of my kids and say, 'Look, my payroll just increased 13 percent,' " he said. " 'Sorry, I don't have any hours for you.' " Plenty more detail in the original item.

Basic economics really...

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Blogger Arthurian Legend said... 9:45 pm

Another point which I think Tim W brought to general attention some time back is this:

not only is a minimum wage law likely to reduce the levels of current employment, even where unemployment is falling in the economy overall (as in the period from 1997 onwards in the UK), it will still raise the unemployment level over what it would overwise have been. That is to say, without a minimum wage law unemployment is likely to be even less than it it, even if it is actually falling.  

Anonymous Justin said... 9:52 pm

As a Conservative, I don't have a problem with the minimum wage.  

Blogger Croydonian said... 10:09 pm

AL - thanks for that.

Justin - it *might* be good politics, but is it good economics?  

Blogger Arthurian Legend said... 10:15 pm

On that reasoning, Justin, what is the philosophical difference between Conservatism and socialism?

As a member of the Conservative party, I DO have a problem with a minimum wage law; at least, with one that will have any effect.  

Anonymous Colin said... 10:32 pm


"As a Conservative, I don't have a problem with the minimum wage."

I have to admit that I don't quite understand your statement. Could you please explain the relationship you apparently are seeing between conservatism and minimum wage.  

Blogger Newmania said... 1:43 am

Speaking as a member of a well known crime family I am ambivalent about a minimum wage....?

I think the arguement for a minimum wage is probably makeable. The requirement fot expensive Health and Safety standards no doubt also reduces employment but would we ditch them entirely?

I do not think it is a philosphical requirement of a Conservative to be wedded to extreme Free Market thinking. Conservatism certainly predates this sort of philosophy in its modern form and has elements that are opposed to it.  

Blogger Newmania said... 1:44 am

I should say that I myself include free markets as a vital component in my own version of Conservatism.  

Blogger Croydonian said... 8:27 am

N - I would agree that by no means all people self-identifying as Conservatives (large 'C') as hawkish on markets as I am, but it is worth bearing in mind that the minimumhas only been around since the current rabble took over. Given how little understanding the man and woman in the street has of basic economics, I fear that scrapping it would be very poor politics. I have been at the sharp end myself - many years ago I was seeking to become a trainee solicitor, and the Law Society had a minimum wage which very cleary was more than the market could bear if there were going to be anything like enough traineeships to go round. I ended up out in the cold as a result of it, and despite making the case to them quite trenchantly nothing was done. Still, if they had listened maybe I would be picking through a messy divorce settlement, land registry papers or a PFI deal now rather than engaging in a little light blogging.  

Blogger Newmania said... 9:33 am

..and maybe not . Thinking about this I feel a possible error is to imagine that the market has no mind, dynamic or slack. The concept of "satisficing" is acceptable even in rigorous monetarist thought and satisficing ,as I well know ,is the most distinctive feature of any company..don`t even talk about state monopolies .

What will happen if wages can easily be driven down is that they will be . If that avenue to the correct level of achievement is blocked then other avenues will be more tempting , ideally adding value to the staff so as to justify the wage . If you think companies operate at the maximum possibe profit you are very wrong at all levels hitting targets is the aim , not exceeding them..( then they will be moved)

Theoretically we end up with a high value economy raher than a low value resource .

Obviously there us a balance but to invite the market to operate in an easy and exploitative way would be far out of step with the last 150 years of progress in protecting Labour. I would not want to go back to Victorian Laissez Faire , neither would they having energetically changed it.

On your life choice moan there was long article about how arts graduates usually ended up earning less than non graduates in the DT the other day.

Harrumph and me with my vakuable knowledge of Browning an `all.  

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