
Silicon Valley Labor Scandals Prove Minimum Wage Hikes Don't Cost Jobs - chrismealy
http://www.newrepublic.com/article/116608/silicon-valley-labor-scandals-prove-minimum-wage-hikes-dont-cost-jobs
======
spikels
Idealogical Blogger says unrelated events long ago support his current agenda.

------
ergoproxy
When silicon valley execs collude to lower wages, there's effectively one
employer for high tech workers; and in a monopsonistic labor market, raising
wages doesn't reduce employment, it actually increases employment, increases
output and lowers prices--something that's easy to prove by drawing supply and
demand curves and considering what happens when we start off with the price of
labor below the equilibrium price, and then increase it up to the equilibrium
price.

However, silicon valley jobs aren't the same as minimum wage jobs: McDonald's
and Burger King aren't colluding and agreeing not to hire each other's workers
and so forth.

Moreover, when NJ raised its minimum wage in 1992, what happened was (1)
employment increased, and (2) prices increased. This observation fits neither
the competitive nor the monopsonist model! These observations were made by
David Card and Andrew Krueger.

A resolution for the "Card-Krueger Paradox" was developed by A. Ross Shepherd,
Professor Emeritus of the University of Missouri--Kansas City and Published in
the Southern Economic Journal on Oct 1, 2000. There's a copy online here (but
it lacks the figures):
[http://www.thefreelibrary.com/Minimum+Wages+and+the+Card--
Kr...](http://www.thefreelibrary.com/Minimum+Wages+and+the+Card--
Krueger+Paradox.-a066582730)

His solution boils down to realizing we have an impure monopsonistic market in
which the higher minimum wage increases the firm's Long Run Average Cost. So
employment goes up, but so do prices.

