Arnold Kling  

Tyler Cowen's Evil Twin on the Minimum Wage

Great Minds on Health Care?... Don't Let Tyrone Off So Easily...

Tyrone writes,

Minimum wages probably lower the net amount of government intervention in an economy. Lower minimum wages would mean higher welfare payments to make up the difference. Ever heard of EITC? In reality, minimum wages and EITC work together to keep the poor at decent standards of living. More importantly, they keep poor workers in the private sector rather than letting them become wards of the state.

I think that policies like the minimum wage or the laws to force Wal-Mart to pay more in health care benefits are issues where the economic impact is small relative to the emotional activation. People on the left get really mad at what they perceive as injustice, and those of us on the right get really mad at what we perceive as economic ignorance, but in the end there probably is not much impact one way or the other from these policies.

Now if Tyrone ever started arguing in favor of "Medicare for all," that would be frightening.

Alex Tabarrok writes,

Please do not encourage Tyrone. He is a bad, bad, man.

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CATEGORIES: Price Controls

COMMENTS (5 to date)
Mcwop writes:

This is something I have always argued. I do not believe changes in the minimum wage really help or hurt the people that actually earn the minimum.

There is a bigger reason why politicians like to hike the minimum wage, which is that union contracts are often tied to that wage. For example, many union contracts call for automatic adjustments to wages based on changes to the minimum.

Mcwop writes:

I should have added to my post above that there is little effect at the current levels. But, there is a point where the min wage could have an effect - e.g. raising it to $27 and hour.

Mike Everett writes:

"Lower minimum wages would mean higher welfare payments to make up the difference."

Only if we're talking about someone who's already employed.

Jon writes:

Arnold writes:

those of us on the right get really mad at what we perceive as economic ignorance

Is it ignorance or value differences? There are certainly plenty of people who understand the law of supply and demand who favor minimum wages. Or are those on the right considering the fact that the net result is still a transfer of income to those in the lowest paid jobs?

David Andersen writes:

I don't think the beef is economic ignorance. Even if (and I'm skeptical) such policies don't have a significant economic impact, they create and support an entitlement culture that over time leads to more and more government mandated distortions that do eventually have a significant economic impact.

Today's 'right to have a living wage' provides the foundation for tomorrow's 'right to health care, jobs, and 12-weeks of paid vacation.'

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