
Economists agree: Raising the minimum wage reduces poverty - curtis
http://www.washingtonpost.com/blogs/wonkblog/wp/2014/01/04/economists-agree-raising-the-minimum-wage-reduces-poverty/
======
jbellis
It's pretty easy to find research coming to a different conclusion than the
Card/Kreuger paper that most pro-minimum-wage-increase people cite:

[http://gregmankiw.blogspot.com/2006/06/sperling-on-
minimum-w...](http://gregmankiw.blogspot.com/2006/06/sperling-on-minimum-
wage.html) [http://cafehayek.com/2009/09/new-study-casts-doubt-on-
card-k...](http://cafehayek.com/2009/09/new-study-casts-doubt-on-card-
krueger.html) [http://rjwaldmann.blogspot.com/2009/12/in-which-i-
disagree-w...](http://rjwaldmann.blogspot.com/2009/12/in-which-i-disagree-
with-paul-krugman.html)

But the best reasoning I've seen on the subject is Bryan Caplan's:

"Suppose you have a weak prior about the disemployment effects of the minimum
wage. Suppose further that you think that the best empirical work in economics
is very good indeed. Doesn't existing evidence then oblige you to admit that
the minimum wage has roughly zero effect on employment?

"Hardly. Why not? Because there is far more 'existing evidence' than meets the
eye. Research doesn't have to officially be about the minimum wage to be
highly relevant to the debate. All of the following empirical literatures
support the orthodox view that the minimum wage has pronounced disemployment
effects:"

[http://econlog.econlib.org/archives/2013/03/the_vice_of_sel....](http://econlog.econlib.org/archives/2013/03/the_vice_of_sel.html)

~~~
cjo
Even if minimum wage does cause some unemployment that's not the beginning or
the end of the story. It's a market distortion created to counteract two other
market distortions - namely already existing unemployment and market
concentration on the employers' side, both of which depress wages.

So even proving beyond a doubt that minimum wage causes an increase in
unemployment isn't enough to abolish the institution if there isn't a better
solution to the problems at hand. Plus, unemployment percentage is not a
robust enough metric to base the entire conversation on.

I liked Bryan Caplan's piece but to me it was predicated on the idea that
minimum wage is based on errors in logic and _not_ based on distortions in
markets (especially in his conclusion.) I'm yet to see a better idea for
addressing the downward effect of unemployment and oligopolization on low end
wages. Caplan's solution seems to be deregulation but to me that's a bit like
letting the wolves and the sheep work it out for themselves.

~~~
xixi77
I am actually a little confused, why do you consider unemployment a market
distortion, and how does the minimum wage helps to correct it?

~~~
cjo
OK, I'll respond to this and harryh's at the same time. First of all,
"distortion" is relative to what economic model you're starting with - so it
can get a bit tricky, and I'm not very concerned with using the absolute
correct technical term. But I'll make my case from the ground up:

Unemployment has a downward effect on wages because there's more competition
for every job, just like competition between firms for employees will increase
wages. Ideally these things will all even out. Unfortunately in our current
economy we have high market concentration (so low competition between firms
for employees which decreases wages) and high unemployment (so high
competition for each job which also decreases wages). So we see lower wages
from what they would be under Perfect Competition (or an ideally functioning
free market) where I'm told it's impossible for these things to persist.

Minimum wage laws put a limit on how much firms can wield this market power
given to them by market conditions. Without minimum wage/collective bargaining
of some sort (and without technological advances, etc.) history and economic
theory agree that firms will tend to push wages down to subsistence levels in
order to maximize profits. Minimum wage is not the greatest tool, and I don't
actually like it - but I do think it should be higher. We have a lack of good
options at the moment so we're left picking the best of the bad.

But why do I call it a distortion? Large enough unemployment, coupled with
lack of competition between firms for employees causes such a shift that the
free market is barely distinguishable from slavery for those at the bottom
(subsistence wages are literally only enough to survive and keep working.) So
I throw around the word distortion because I'm trying to communicate that
unemployment gives such a large amount of market power to employers that the
market becomes _fundamentally different_ from what we expect in a Free Market.

------
derefr
If I recall, _economists_ tend to point out that the causation between minimum
wage and poverty is actually reversed from its "intuitive" position.

What actually tends to happen, is that _first_ , a city/county/state/country's
economy improves to the point that everyone is making a certain wage, just
because of competition for workers. And _then_ , policy-makers notice this,
realize that there's an upside (better civic image) and no downside (workers
out of jobs) to raising the minimum wage... and so they do.

Thinking of minimum wage as an adjustable variable, rather than an indicator,
is trying to use the tail to wag the dog.

~~~
ddebernardy
Not quite. What actually happens is that by raising the minimum wage, you lift
minimum wage earners from a state where they barely survive to make ends meet
to one where they consume the stuff that society at large is producing.
There's a virtuous circle in there. It's that thing Ford showed in its early
days: paying workers extra so they can buy the cars they produce yields more
economic activity for the benefit of everyone -- they also bought fridges and
what not.

The trouble is stopping just short of the level at which (by minimum wage
earner standards) they begin to live in opulence. That meaning, in this case,
not so much when they're able to afford a yatch, but when they begin to
consider putting on more debt than they can actually afford -- debt that won't
get repaid. In that case, a vicious circle creeps in, because the ups and
downs in excess debt levels contribute to inordinately sized booms and busts,
e.g. like we have now.

So the real conclusion should be, since most people in developed countries
earn barely more than the minimum wage itself: having a large consumer class
benefits everyone in the economy provided that it is solvent.

~~~
derefr
> by raising the minimum wage, you lift minimum wage earners from a state
> where they barely survive to make ends meet to one where they consume the
> stuff that society at large is producing

Do you have a citation on this? A raise of the minimum wage actually having an
_effect_ at the margins, in either direction, is unusual, because places don't
tend to raise the minimum wage until it wouldn't have an effect anyway.

Raising the minimum wage does serve as a _ratchet_ , to prevent productivity
from slipping down to previous levels. But this basically mirrors the other
way in which places transform to exclude low earners: gentrification.

~~~
ddebernardy
Not handy, but use your common sense if you will: if you're surviving on
$8/hour or whatever it currently is in the US, and your wage increases by a
dollar per hour, then all things being equal you're going to be spending that
extra buck on a range of things that had been delayed for a while: shoes for
the kids, new tires for the car, and what not. This is consumption, and it's
going to get recycled over and over again across the economy for the benefit
of everyone.

The trouble is if you increase it to $50/hour. (Assuming the businesses
survive, which is indeed a big if...) In this case you buy everything you ever
needed or wanted, and...?, then what? You save it, put on debt to buy a huge
mansion that you'll never actually be able to afford in the end, or otherwise
contribute to some random asset bubble, snd you get booms and bust cycles.
(See Steve Keen's research on the latter point, fwiw.)

~~~
xixi77
The question you have to ask is, where does this extra dollar come from?
(owners' margins? wages of workers who are now unemployed? consumers'
budgets?), and how much _extra_ consumption it generates in the still-employed
workers' pockets, _compared to where it was before_?

~~~
nhaehnle
I guess we can agree that the money is shifted downwards in the income
spectrum relative to where it was before. Other things equal, lower-income
households have a higher marginal propensity to consume. So shifting money
downwards will boost consumption.

------
logicchains
The minimum wage is ultimately always zero; employers can simply choose to not
hire you if they think your productivity is not enough to justify paying you
the minimum.

As an Australian who spent a couple of years in Asia (where minimum wages are
much lower than Australia's $16/hour), one of the most stinking things I
noticed was how much easier it was to find work there. I have 'unskilled'
Australian friends who have spent months looking for work, without luck,
whereas in Singapore for instance it seemed rare for somebody to take more
than a week or two to find work.

While the quality of the work may be lower than that of minimum-wage work in
Australia, it at least provides unskilled individuals with an opportunity to
develop the experience, skills and confidence necessary to move onto better
jobs, while their Australian counterparts are still sitting around at home
feeling dejected at being unable to find work.

~~~
crdoconnor
>In Singapore for instance it seemed rare for somebody to take more than a
week or two to find work.

It took me a LONG time, and the work I ultimately found was much lower paid
than it would be in Australia, the US or Europe.

Singapore is a perfect example of what happens if you have no minimum wage.
The majority of the country's wealth gets diverted towards profits. Wages all
around are lower.

The only reason it doesn't cause massive social instability in SG is because
the government keeps housing, health care and education affordable by rigid
price fixing.

------
saosebastiao
This is silly...of course it reduces poverty for those that do not lose their
jobs...and if you operate under the assumption that anyone earning the minimum
wage is living in poverty, then of course it would reduce the percentage of
people living in poverty in aggregate.

There is still a few _major_ problems with it as policy:

1) For those that do lose their jobs, their effect is extremely negative.

2) For those with little to no work history, the possibility of being priced
out of an entry level job is a huge problem, leading to the prospect of
reduced earnings for the rest of their life. [1]

3) For those who do not lose their jobs, the fact that they didn't lose their
jobs is indicative of more major problems...they either don't understand the
value of their labor, or they don't know how to negotiate with their
employers. A minimum wage increase for these people is like treating the
symptoms instead of the disease, and without addressing these issues, these
people will likely be underemployed for a long time.

For those reasons alone, the minimum wage is a terrible way to reduce poverty.
A serious answer is three-fold:

1) Use real programs to reduce poverty. This means a robust welfare system or
a negative income tax or a universal basic income. These cost money, but at
least their costs are known, as opposed to the mostly invisible costs of the
minimum wage.

2) Promote wage transparency laws (which help those who are underpaid to know
the true value of their labor). These prohibit employers from firing or
retaliating against employees for discussing wages, which is a tactic to keep
information asymmetrical in the favor of the employer.

3) Abolish the minimum wage.

[1]
[http://www.nber.org/papers/w5030.pdf](http://www.nber.org/papers/w5030.pdf)

~~~
crdoconnor
>For those that do lose their jobs, their effect is extremely negative.

Raising the minimum wage does not lead to higher unemployment.

>For those who do not lose their jobs, the fact that they didn't lose their
jobs is indicative of more major problems...they either don't understand the
value of their labor, or they don't know how to negotiate with their employers

That's paternalistic bullshit. In reality, they can't afford to have a long
term time horizon. They usually need a job quickly and cannot afford to hold
out for a better one.

------
jswinghammer
The basic issue is that economics is not an empirical discipline but rather a
deductive one. You cannot test anything in isolation because you cannot have a
control. All economists can say is "If you do X _when nothing else changes_ Y
will result". It is basic economics that when the government mandates a price
floor then anyone who cannot sell their goods for anything below that floor
will not be able to sell their goods. Thus it will hurt those it's trying to
help. No studies are going to disprove that. It's elementary logic.

~~~
cjo
> It is basic economics that when the government mandates a price floor then
> anyone who cannot sell their goods for anything below that floor will not be
> able to sell their goods. Thus it will hurt those it's trying to help.

Applying this to the low end of the labor market is pushed in a lot of Econ
101 classes but it requires so many assumptions to be true that the model only
has a passing resemblance to reality.

To use your own logic, you can't say that raising the minimum wage won't also
change other variables important to the model but assumed to be constant
(maybe it causes companies to outsource, maybe it causes workers to emmigrate,
maybe it raises worker productivity) - so if economists are truly constrained
to _ceteris paribus_ situations then they have nothing to say about the
effects in reality from a minimum wage increase.

~~~
jswinghammer
Yes they can. This is because we can discuss what higher prices do-invariably
they cause market actors to seek substitutes. If you push a $15 minimum wage
it stands to reason that there would be demand for any machinery that would
allow for cost savings. It would be good for the sectors of the economy that
would supply these cost savings technologies. Ultimately marginal workers
would get hurt even further once these technologies emerged.

~~~
cjo
Sounds like it's a choice between a short period of minimum wage pay and then
getting replaced by "cost saving technologies", or a slightly longer period of
subsistence wages and then still getting replaced. It's easy to argue that
since the cost of technology goes down with time that any replacement of
workers due to a minimum wage hike will happen anyways when the tech gets
cheap enough.

Here's a question. Both market concentration (as in oligopoly) and
unemployment have significant downward effects on wages especially in the low
end of the labor market. I don't like minimum wage and I wish we didn't have
it but it's the best solution I've seen to these problems. Do you have a
solution to these problems?

~~~
jswinghammer
Ideally I would abolish fractional reserve lending and the inflation that goes
along with it. That inflation of the money supply has a medium and long term
effect of raising prices. In a free market prices would drop thus your bad
wage gets better even if you can't ever find a better job.

~~~
cjo
Well I certainly agree that money in general and our relationship to it could
use a good rethinking - which is a surprisingly unpopular opinion considering
America's financial sector pretty much imploded just a few years ago.

But I don't follow how solving that problem addresses markets becoming
concentrated and member firms using that advantage to push wages down towards
subsistence levels. That I think requires some sort of collective bargaining,
which minimum wage is a type of (although it's likely not the best.)

~~~
jswinghammer
Marx was concerned about wages being pushed down but even in his own lifetime
it never really happened that way. It's something that seems desirable for the
businessman if possible but something that they have no control over. The
reason being that other companies will compete for workers and have an easy
competitive advantage over firms who are trying to drive workers to poverty.

Markets work to coordinate prices for both consumers and producers. Those who
resist the laws of markets pay eventually. Might not happen right away but it
happens-always.

My point is that low wages are never good exactly but they can be better if
those wages pay for more year over year. It's like getting a raise without
having to negotiate or even do anything for it.

~~~
cjo
Ah, c'mon, don't pin it on The Bearded Guy! That stuff predated him (see
Ricardo's Law of Rent:
[https://en.wikipedia.org/wiki/Law_of_rent](https://en.wikipedia.org/wiki/Law_of_rent)).
The Bearded Guy was after all the last of the Classical Economists :)

He also didn't think wages would make it to subsistence:
[https://en.wikipedia.org/wiki/Iron_law_of_wages#Socialist_cr...](https://en.wikipedia.org/wiki/Iron_law_of_wages#Socialist_criticism)

------
erichocean
"Reducing poverty" is a good reason, which is why minimum-wage advocates talk
about it.

But the real reason minimum-wage advocates want to increase the minimum wage
is to increase the pay of union members, who's pay is indexed to the minimum
wage.

 _That 's_ the voting block that matters to politicians, not the near poor,
who barely vote and certainly don't have the time (or skills) for political
activity (unlike the unions).

~~~
crdoconnor
Unions haven't mattered to politicians in decades.

However, corporate lobbyists do - they largely control Congress and the
executive branch.

Wanna know why they're against a higher minimum wage? Because it's inversely
proportional to their profits.

------
jmckib
Very misleading title, economists absolutely do not agree on this point, just
read the responses to Card/Kreuger. My view after taking all of this in: there
are valid theoretical models that both support and disagree with the view that
the minimum wage reduces poverty, and so far the statistics are not clear
either way. Given that we don't know, why not support more effective policies
for combating poverty such as the negative income tax (Milton Friedman was a
proponent of this), or even unconditional income? Those policies would be such
a win-win in terms of both reducing poverty and reducing the costly
bureaucracy surrounding welfare programs, but unfortunately they don't seem to
be politically viable yet.

------
MarkCancellieri
Just think how prosperous we would be if the minimum wage was $100 an hour!
;-)

~~~
krakensden
Just because things don't work asymptotically doesn't mean they don't work.

~~~
jedmeyers
But why would a $15/hour minimum wage work and $100/hour won't? Where between
15 and 100 do you draw the line and why?

~~~
rayiner
Why raise the thermostat setting from 40F to 65F? Why wouldn't 100F be better?
Where between 65F and 100F do you draw the line and why?

~~~
cstejerean
I draw the line at about 74. When it starts to get into 75+ it gets
uncomfortable for me personally. So instead of being dismissive I think it's
actually worth thinking about the question. If $15 could work as a minimum
wage, and $100 would clearly not work, where in that range does the transition
happen. Or maybe $15 is already too high, but $12 could work. I certainly
don't know the answer, but it's an interesting thing to ponder.

------
DanielBMarkham
Note that this is an opinion column, not a news report or a newspaper-
sponsored analysis done by a reporter.

Also the author does not do justice to the subject, implying much more
agreement than actually exists. I didn't want to go into the political mess of
this, however, simply point out that I was a bit confused as to what I was
reading.

------
jedmeyers
Can someone please give me his thoughts on this hypothetical situation?

Let's say a farmer buys some extra land and instead of hiring 50 people to
work on it he buys a fancy tractor.

\- Would it be right for those 50 people to demand from the tractor factory to
stop making tractors because they are out of work?

\- Would it be right for them to demand from the government the wages they
would have received if the tractors were not made in the first place?

\- Would it be right for everyone to pay a higher price for food because
farmer had to hire 50 people instead of a tractor?

------
tsotha
I'm pretty sure I can find economists who don't agree.

~~~
DanielBMarkham
Yep, and I'm willing to bet ten bucks that in the next 48 hours at least one
of them will write a rebuttal.

------
xixi77
And how exactly does "there is a paper that claims X" translate into
"Economists agree that X is true"?

Well, it doesn't. In fact, I would generally be skeptical about any claim that
starts with "Economists agree...", such is the nature of the profession.

Also, if we actually admit the effect on poverty to be true, the most obvious
way to reconcile this is that newly-unemployed (and hence poor) workers move
to places with lower minimum wage, where they can find work. Fewer poor people
=> less poverty.

~~~
crdoconnor
So you're saying Australians who have a MUCH higher minimum wage and MUCH
lower unemployment should move to America?

Heh.

------
altedork
So I hope those skinflints do just raise the minimum wage a tiny bit. They
need to raise it a lot. A minimum wage of $50.00 per hour would relieve a
great deal of poverty. P.S. [http://cafehayek.com/2014/01/the-wages-of-
journalist-incompe...](http://cafehayek.com/2014/01/the-wages-of-journalist-
incompetence.html)

~~~
dc2k08
No it wouldn't. The amount of dollars you would need to exchange for goods and
services would just increase while the exchange rate for dollars would
decrease.

------
mcbaby
Skimming over Arin Dube's paper, I can't help but wonder why he doesn't
address any of the lurking variables. His time frame, 1990 to 2012, represents
a period of vast technological change throughout the US and the rest of the
world. I admit I did not read the entire paper, but it seems Mike Konczal and
a lot of us are using "causality" and "correlation" interchangeably, which
doesn't seem appropriate. This is not an empirical science... lengthy
extrapolations don't tend to hold their ground in real-world economics. There
are so many other factors and variables working that it seems silly to make
these extrapolations. Again, I did not read Dube's entire paper-—he's
obviously put much more thought and time into that paper than I have this
comment. With that said, that is just my .02

------
spikels
No they don't! [1-6]

The author of this piece, Mike Koczal, is an ideological blogger. You can
catch him on Salon, MSNBC, TNR, etc. The main economist mentioned, Arin Dube,
is not mainstream. He is actually sympathetic to Soviet central planning[7].
And the UMass Amherst Economics department has a well know for its "offbeat"
views (e.g. numerous courses that take Marx seriously), not mainstream, not
concensus.

The truth is this is a controversial, basicly idealogical, issue and if any
consensus exists it is that the results will be mixed: some better and some
worse off (i.e. unemployed).

[1] [http://www.intellectualtakeout.org/library/chart-
graph/econo...](http://www.intellectualtakeout.org/library/chart-
graph/economist-survey-results-whether-minimum-wage-increases-unemployment-
among-young-and-unskilled-worke)

[2] [http://economix.blogs.nytimes.com/2013/03/04/what-
economists...](http://economix.blogs.nytimes.com/2013/03/04/what-economists-
think-about-raising-the-minimum-wage/?_r=0)

[3]
[http://en.wikipedia.org/wiki/Minimum_wage#Surveys_of_economi...](http://en.wikipedia.org/wiki/Minimum_wage#Surveys_of_economists)

[4]
[http://www.princeton.edu/~tleonard/papers/minimum_wage.pdf](http://www.princeton.edu/~tleonard/papers/minimum_wage.pdf)

[5]
[http://www.epionline.org/studies/epi_minimumwage_07-2007.pdf](http://www.epionline.org/studies/epi_minimumwage_07-2007.pdf)

[6] [http://www.intellectualtakeout.org/library/chart-
graph/econo...](http://www.intellectualtakeout.org/library/chart-
graph/economist-survey-results-whether-minimum-wage-increases-unemployment-
among-young-and-unskilled-worke)

[7]
[http://economistsview.typepad.com/economistsview/2012/10/a-n...](http://economistsview.typepad.com/economistsview/2012/10/a-nobel-
for-planning.html)

~~~
nhaehnle
_" offbeat" views (e.g. numerous courses that take Marx seriously)_

Right, how could anybody possibly take one of the most important thinkers in
the history of political economy seriously!

Marx has important but inconvenient things to say even today. He may not have
been right about everything, but a lot is spot on. It's just that lucid
writing about class struggles is rather uncomfortable to those who are winning
these class struggles. In any case, those who ignore him do so at their own
(intellectual) peril.

~~~
spikels
You are correct that Marx is important in the HISTORY of economics (and it's
idealogical cousin, political economy) but he has contributed almost nothing
to modern economics. When he wrote a 150 years ago he understood little of
what you would learn in a freshman intro to economics class. For example, his
most famous belief that all value is derived from labor is so simplistic and
clearly wrong as to be absurd (try responding to this post without capital).

The UMass Amherst economics department describes itself as a center for
"heterodox" economics[1]. Look up the definition of that word and tell me
again how they are mainstream.

BTW - I found Engles to be much more lucid than Marx's rather archaic prose.
He is still almost completely wrong but at least his meaning is clearer.

[1]
[http://www.umass.edu/economics/facjobs.html](http://www.umass.edu/economics/facjobs.html)

------
bqpro1
Of course I am not an economist at all, but still I see here some paradox.
Minimal wedges are paid for the jobs that require low qualifications or in
fact no qualifications. So for example if we raise 4$ per hour to 5$ for such
jobs, we may reduce the value of 1 dollar. If 1 hour of such job was worth 4$
and now is worth 5$, then now 1$ has less value than it used to have. As a
consequence the whole economy may experience inflation. I do not believe in
simple solutions to complicated problems. Printing more money do not reduce
poverty and rising minimal wedges is for me a little bit like printing money.

~~~
crdoconnor
It mostly eats into corporate profits first. Then it starts having an effect
on inflation.

If you think corporate profits are too low (fwiw they're at record highs right
now), and corporations deserve more profit you shouldn't support a raise in
the minimum wage.

If you're interested in what happens to prices if the minimum wage is hiked,
read here:

[http://164.36.50.178/lowpay/research/pdf/NMW_profits_and_pri...](http://164.36.50.178/lowpay/research/pdf/NMW_profits_and_prices.pdf)

"Our analysis of retail prices in 3 catering industries (canteens, restaurants
and takeaways) does not indicate that prices in these industries were
differentially affected according to their exposure to the minimum wage.
Surprisingly, the only evidence of any price effect is found in the canteen
industry where prices rose by a modest 1% in April 1999. "

------
rajacombinator
Well if economists agree I guess we should pass laws implementing it and send
imperial storm troopers to put down any curs who dare to dissent!

------
pkulak
We can all argue about weather minimum wage hikes kill jobs, but the fact
remains that there are not enough jobs, and a lot of the jobs that are around
exist only because labor is cheaper than automation, which hurts efficiency
and GDP. The real solution is to not worry about 1 job for every 1 person and
guarantee citizens a basic income.

------
paul9290
I say cut the ridiculous amount of taxes (34 percent for those making a decent
living) & increase the minimum wage.

No one can live off of $7.25 an hour and $10.10 is definitely a fair/decent
wage.

Sure the cost for things will go up when it's increased, but with taxes
decreased I'm more then happy to pay the higher costs. A higher cost that
keeps people working and earning a living rather then not working and sitting
around living off the peoples' tax dollars.

------
tn13
As rule __always ignore the headlines __and focus on the details. Actually the
article contains very little details about the actual research methodology and
data.

If poverty reduction in short term is the only objective then I am pretty sure
increasing minimum wages will bring some people above the poverty line set at
a time before increasing the wages. But whether that reduction ins poverty is
sustainable over a decade or so is the important question.

------
jruthers
Perhaps, rather than theorize about improving the American minimum wage, look
to other countries that have higher minimum wage and evaluate their level of
poverty (or lack thereof). Look at Australia and Norway, for example.

Granted, the lack of poverty in those countries is not solely caused by a
humane minimum wage - but it's a huge factor, and a positive indicator.

I lived in the US for 7 years and could never fathom how the country as a
whole could tolerate such a system.

~~~
ddebernardy
> but it's a huge factor

[ _credible_ citation needed]

~~~
jruthers
m not sure if you'll classify it as "credible" but the wikipedia article on
HPI shows a clear ranking of countries that roughly correlates to the minimum
wage (higher the wage, lower the poverty ranking). Which.. Doesn't seem like
rocket science.

[http://en.wikipedia.org/wiki/Human_Poverty_Index](http://en.wikipedia.org/wiki/Human_Poverty_Index)
[http://en.wikipedia.org/wiki/List_of_minimum_wages_by_countr...](http://en.wikipedia.org/wiki/List_of_minimum_wages_by_country)

~~~
harryh
Well, maybe.

Or perhaps countries with less poverty are able to support higher minimum
wages?

[http://xkcd.com/552/](http://xkcd.com/552/)

~~~
jruthers
And how did the process start? The poverty situation in the better off
countries didn't start improving because of magical fairy dust.

One end pushes the other end, sure, but you've got to start it somewhere.

People and politicians took action and improved laws, businesses still kept
going and the cycle repeats upwards.

I don't see that happening in the US. I don't mind if the change isn't minimum
wage (not going to happen in America), but at least do /something/ positive.

~~~
harryh
Something must be done? By people & politicians? This is the best way to fight
poverty?

I agree that it isn't "magical fairy dust" that increases wages. What do you
think it generally is?

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groovygazza
Of course it will, and will also reduce expectation of service industry tips
so it's deserved rather than a given.

~~~
jacalata
Only if the service industry exceptions from minimum wage are removed as well.

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xname
Well, the research studies only tell you:

Raising a very little bit of the minimum wage reduces a very little bit of
poverty in the short run, without discussing any negative impacts to the
society (in the short run or in the long run).

It is very different from "raising the minimum wage reduces poverty".

~~~
stretchwithme
I doubt studies connect what happens to employment when a bubble collapses. It
is then that the full effects of a drop in demand are felt and the new higher
wage really causes demand to collapse.

By then, everyone advocating this price control is long gone. Its a time bomb
that explodes in the faces of low wage workers, preventing them from repricing
their services to mer the new conditions.

Of course, smaller, smarter countries like Ireland figured that out and cut
their minimum wages in response to the lowered demand.

------
dadagaaa
Duuuuuuuuhhhhhhh

