Wednesday, October 26, 2005

Minimum Wage

A student asked me the other day about what the current minimum wage was, and given it has recently changed in Wisconsin, I didn't know.

The Federal Minimum Wage is still $5.15 an hour. Wisconsin's is currently $5.70 an hour for adult employees. The other states can be found here.

I wasn't 100% sure what happened to the local minimum wage proposal, but it looks like it passed. According to the article:
The council's action will raise the minimum wage from $5.15 per hour to $5.70 per hour as of Dec. 1, and $6.50 per hour as of Dec. 1, 2006.

It looks like I need to write an op-ed covering the research on this. But I just discovered the story behind the minimum wage is worse than one might think, I should have figured. From the Marginal Revolution:
It's no surprise that progressives at the turn of the twentieth century supported minimum wages and restrictions on working hours and conditions. Isn't this what it means to be a progressive? Indeed, but what is more surprising is why the progressives advocated these laws. A first clue is that many advocated labor legislation "for women and for women only."

Progressives, including Richard Ely, Louis Brandeis, Felix Frankfurter, the Webbs in England etc., were interested not in protecting women but in protecting men and the race. Their goal was to get women back into the home, where they belonged, instead of abandoning their eugenic duties and competing with men for work.

Unlike today's progressives, the originals understood that minimum wages for women would put women out of work - that was the point and the more unemployment of women the better!

Update: I forgot about this. Wal-mart has asked Congress to raise the Minimum Wage. The Division of Labour Blog has a nice synopsis of their motivation, though they say it is to increase the income of their customers, research shows it does not. From an NBER working paper:
The evidence indicates that workers initially earning near the minimum wage are adversely affected by minimum wage increases, while, not surprisingly, higher-wage workers are little affected. Although wages of low-wage workers increase , their hours and employment decline, and the combined effect of these changes is a decline in earned income.

Keywords: ECO120, Price Floor, Min. Wage


Justin said...

On Walmart's Motivation:

While Walmart does pay above the minimum wage, I think the general belief among many Americans is that they pay the absolute lowest wage possible. I have heard from many people that they simply do not shop at Walmart because of how they treat their employees.

So by proposing an increase in the minimum wage they come off as a somewhat less evil corporate giant at no real cost to them. This in itself could lead to a larger customer base that may trump any possible benefits resulting from the same customer base with slightly more income.

Overall, this is a brilliant strategy by Walmart even if no actual changes in the minimum wage law are enacted.

Taggert said...

Justin- I think you are exactly right...although they probably wouldn't be disappointed if it hurt their competitors at the same time. Win-Win from their perspective, its a wonder it took them this long to come to it.

Brad said...

What do you think is the appropriate minimum wage for workers?