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The Progressive Economics Forum

Minimum Wage

A lot of debate in the US on Obama’s excellent proposal to hike the minimum wage.

John Schmitt of CEPR has put out an excellent paper summarizing all of the research to show that the employment effects of reasonable increases are … Zero, zilch .. Due to various adjustment mechanisms including lower turnover, higher productivity and wage compression. He also a notes that minimum wages complement income supplements for the working poor by limiting subsidies to low wage employers.

Keep this for future reference.

http://www.cepr.net/documents/publications/min-wage-2013-02.pdf

Comments

Comment from Paul Tulloch
Time: February 19, 2013, 6:48 am

There will be a resistance, the bigger question is why? My thoughts, this is a bigger ideological space that a tug of war is occurring on, and it goes to the very top of the economic world. Is the US govt finally ready to say to corp America, we are done hearing about how profits will lead us out of this recession. I.e. neoclassical versus the heterodox post keynesians. Will we finally see a real move towards demand management type policies to fix this stagnation? Profit motives, and the whole neo con arguement, get govt out of the way and let profits be the harbinger of wealth might finally have lost it luster with the US. At least maybe there is a bit of spasmotic shuffling of the deck?
There is just so much here to say, but ultimately, it could be the thin edge of the wedge that the neo cons fear. Can we finally get somewhere with govt demand management in the US? Minimum wage laws would be a good start. Would it be too much to ask to reverse right to work laws? That is probably not going to happen under Obama. Will need somebody awhile lot more organically connected to the class divide.

Comment from Paul Tulloch
Time: February 19, 2013, 7:00 am

The right will fight to the end to prevent demand managment, as it means empowering the state. The Private decision making over investment will be protected above all else, and any slight infringement on that space, aka, demand management would be a threat to reregulating capital.

Despite all we have been through, regulation of capital has been furiously and successfully resisted in the USA. Nobody gives up power without a real fight, sadly Obama despite all the rhetoric never became that threat. Talk is cheap, executive orders are totally another thing.

Comment from Paul Tulloch
Time: February 19, 2013, 2:33 pm

sorry for comment spamming but after all that- I need to clarify that my point is- will demand management finally be with us as a legitimate policy response to this elongated crisis within the global economy- and a minimum wage increase although meaningful for many working poor, is what I would call a fairly small intrusion into that space.

Are we finally at a new stage of capitalism- are we seeing the beginning of the formal policy end of the neoliberalism that took hold in the 70′s and ratcheted back both the state and organized labour power?

Are we at this point finally?

Given the re-recession fever grasping at the throat of the economies in Europe, and asia, and the paltry 2.0 % GDP in N. America- (if we are lucky), that something has to change- something soon will have to give, somewhere. Or will the neo-cons take us all down in burning flames with their protect our private wealth at all costs economic policy. Most global powers still have the neoliberal – protect profits for investment at all costs- within their main policy arsenal. But it would not take too much, aka, Obama starting with a minimum wage hike to get us started.

It could be a call to arms if he can succeed in such manner.

Of course I could be wrong- and many working poor get a raise and it all stops there- but I have a feeling given the lack of growth and alternative thinking- that I am on the right course here.

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