Sunday, November 26, 2006

Posner on raising the minimum wage

Judge Posner writes here:

"Increasing the federal minimum wage, currently $5.15 an hour, is a priority of the new Democratic Congress. Democratic leaders want to raise it by 40 percent, to $7.25 an hour. From an economic standpoint, even from an egalitarian standpoint, raising the minimum wage, especially by such a large amount (roughly 10 percent of the American workforce makes less than $7.25 an hour, which is double the percentage of the workforce that is paid the current minimum wage), would be a grave mistake."

I once dealt with an expert witness who in calculating future wages used some rate of wage growth based on the historic rate of increases to the minimum wage by Congress. The minimum wage? That's just some artificial number with no relation to the market, I declared. He said, well, that depends on your politics. I said, that's exactly right, it's all politics. I suppose he was correct that the wages paid for some lower-income jobs are affected by the minimum wage, but betting on Congress seemed like poor science to me.

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