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Libertarian Party Platform
We support repeal of all laws that impede the ability of any person to find employment, such as minimum wage laws...
David Card and Alan B. Krueger have already made national news with their pathbreaking research on the minimum wage. Here they present a powerful new challenge to the conventional view that higher minimum wages reduce jobs for low-wage workers. In a work that has important implications for public policy as well as for the direction of economic research, the authors put standard economic theory to the test, using data from a series of recent episodes, including the 1992 increase in New Jersey's minimum wage, the 1988 rise in California's minimum wage, and the 1990-91 increases in the federal minimum wage. In each case they present a battery of evidence showing that increases in the minimum wage lead to increases in pay, but no loss in jobs.
A distinctive feature of Card and Krueger's research is the use of empirical methods borrowed from the natural sciences, including comparisons between the "treatment" and "control" groups formed when the minimum wage rises for some workers but not for others. In addition, the authors critically reexamine the previous literature on the minimum wage and find that it, too, lacks support for the claim that a higher minimum wage cuts jobs. Finally, the effects of the minimum wage on family earnings, poverty outcomes, and the stock market valuation of low-wage employers are documented. Overall, this book calls into question the standard model of the labor market that has dominated economists' thinking on the minimum wage. In addition, it will shift the terms of the debate on the minimum wage in Washington and in state legislatures throughout the country.
When governments put a regulatory floor under wages, does that destroy jobs? An update on a long-running dispute
THE story so far. For many years economists took it for granted that a compulsory minimum wage, set much above the floor that emerges in an unregulated labour market, would reduce employment. Young or unskilled workers would be unable to find work at the mandatory minimum: the bottom of the demand curve would be chopped off. Of course, if the minimum were so low as to impinge on none of the wage bargains actually being struck, there would be no effect. The higher the minimum wage, once it starts to bind, the bigger the loss of jobs.
The possibility that a minimum wage would not reduce employment, and might even increase it, was acknowledged. This could happen through market failure of some kind. Suppose, for instance, employers have monopsony power as buyers of labour: they will curb their demand, to drive wages lower. A minimum wage could remedy this, raising wages and expanding employment at the same time. But in a normal, competitive labour market, this should not arise.
Then along came David Card and Alan Krueger, two of America’s most distinguished labour economists. They looked at the effect of a big increase in New Jersey’s minimum wage, in 1992, on employment in the local fast-food industry—and they discovered that it pushed employment up. This attracted wide attention. The claim featured prominently in their widely cited book “Myth and Measurement”. It influenced the debate over raising the minimum wage in the United States; and when Britain introduced a minimum wage of its own, their findings were cited again.
Next came a paper by David Neumark and William Wascher. They went back to the New Jersey case, using different and (they argued) better data and methods. They found that the rise in the minimum wage had reduced employment, after all, much as one might have expected.
For those who follow this intriguing quarrel, there are new developments to report. In the current issue of the American Economic Review, after the protracted delay normally associated with that esteemed journal, both sides publish revised and polished versions of their earlier positions. They have reviewed each other’s work and made adjustments. The difference has narrowed, but remains. In essence, Messrs Card and Krueger defend the validity of their earlier work; in essence, Messrs Neumark and Wascher still think it wrong. But the range of their respective estimates has shifted—enough so that they now touch, just, in the middle. Messrs Card and Krueger no longer insist that the higher minimum wage pushed employment up; they have settled for saying that (contrary to the standard model) it “probably had no effect”. Messrs Neumark and Wascher have lightened the emphasis on falling employment, emphasising instead their conviction that (contrary to what Messrs Card and Krueger had first claimed) employment did not go up.
Left to its own devices, the market will naturally come to the point that best serves all parties involved in the market. Minimum wage sounds good on the surface, but when you dig a bit deeper you'll soon discover that it's not.
Please see the link above for a more detailed (and better) description.
The beauty of the free market is that if a company is not paying what workers believe to be a fair wage, the workers can leave and go somewhere else (or go on strike in the case of a union). In other words, demand will be higher than supply. The company will have to raise its wages in order to attract workers and stay in business.
The free market will always work itself out to best serve the interests of everyone, and government meddling produces more problems than solutions.
Just as the discussion seemed about to fizzle out, two new contributions have arrived. A note by Thomas Michl suggests a different compromise: maybe both of the earlier positions were correct. After examining the data already collected, Mr Michl suggests the following possibility: that the minimum-wage increase left the overall number of workers employed roughly the same, but reduced their hours. (Not implausible, given that most workers in the fast-food business are part-timers.) Then it would be true that the wage rise reduced the demand for (hours of) labour, as the standard model says; but at the same time it could also be true, as advocates of the minimum wage say, that the incomes of the affected workers went up, thanks to the combination of fewer hours at work and the higher wage rate. In which case the policy could be judged a success, even though it had “reduced employment”.
Still there? Hold on, because yet another new idea, much more hostile to minimum wages, has now been put forward. Peter Tulip, an economist at the Federal Reserve, asks a different but very interesting question: could a high minimum wage raise the equilibrium economy-wide rate of unemployment (or NAIRU)?
This directs attention away from the “affected workers” in fast-food restaurants or wherever, the focus of the earlier research, to the labour market as a whole. Suppose a high minimum wage, by pressing on the structure of pay differentials, raises wage growth and hence inflation across the economy. Higher unemployment would then be necessary to stop inflation accelerating. Employment might not fall among “affected workers”, but it would have to fall in some other part of the economy. The damage would be subtler, but no less real.
Mr Tulip finds, on crunching his numbers, that this is what happens. So strong is this indirect effect, on his calculations, that the gradual fall in the relative value of America’s minimum wage over the past 20 years is capable of explaining 1.5 percentage points of the fall in the country’s equilibrium rate of unemployment over the same period. In Mr Tulip’s view, a good part of the difference between the low equilibrium rate of unemployment in America (and Britain) and the much higher rates in continental Europe can be attributed to Europe’s higher minimum wage.
The invention of the market economy in Great Britain and the United States more profoundly revolutionized the world between 1800 and the present than any other single force. After five millennia of blundering, human beings finally figured out how wealth may be produced in a sustained, systematic way. In Great Britain, real wages doubled between 1800 and 1850, and doubled again between 1850 and 1900. Since the population of Great Britain quadrupled in size, this represented a 1600 percent increase within one century. The gains in personal choice — in a more varied diet, new beverages, new skills, new vocations — increased accordingly.
I believe we were discussing simplistic models? Well, we may have a case of an overly simplistic study here. In science and engineering, we require several studies be performed with the same, or similar, results before making a general conclusion. This applies equally well to all fields, including economics. We do not have the data to make a conclusion one way or the other.
It is a fallacy to declare early free market capitalism as a failure by comparing the standard of living in the 19th century to that of the late 20th-early 21st centuries. Instead, you must compare it to that of the 18th century; in this light, there was much improvement. Michael Novak explains this in his book The Spirit of Democratic Capitalism:
I don't understand how left-wing libertarians can continue to believe that government intervention in every aspect of the economy will lead to economic bliss for all, in light of failures such as the Soviet Union.
Government only results in corruption and waste, and human nature will not allow the socialist state to endure.
Originally posted by Saphronia
The minimum wage is supposed to protect workers but its horribly low--nearly 5 dollars below living wage standards in some areas.
That is why many city governments have passed living wage law. The draw back to this is that larger companies tend to steer clear of those cities. Its hard for me to demand our government force companies to pay living wages, but at the same time without some governance less skilled Americans are more open to being abused. As of right now the minimum wage works to impose poverty--it has to be raised to fit the an honorable living standard.
Median weekly earnings of the nation's 101.3 million full-time wage
and salary workers were $639 in the second quarter of 2004, the Bureau of
Labor Statistics of the U.S. Department of Labor reported today. This was
3.7 percent higher than a year earlier, compared with a gain of 2.8 percent
in the Consumer Price Index for All Urban Consumers (CPI-U) over the same
Originally posted by cavscout
donguillermo, this is supposed to be about minimum wage, not taxes. I refered to the taxes in the context of the overall picture of how other libertarian issues would come into play when debating the minimum wage. I think an all out debate on taxes and socialist euro nations should be reserved for other theads.
As far as the usage of the word libertarian goes, I dont think you understood what I was getting at. I understand that some people like to discribe ultra liberals as left libertarians, and in anyother place I would not object as strongly to this. However, when forming of the Libertarian Team, I don't think Michael Moore was what anyone was thinking. A word does not mean whatever you want it to mean.
It does not mean whatever www.politicalcompass.org wants it to mean.
Can you really say that you think the little banner that says Libertarian/Green Contributor didn't mean the Libertarian Party and the Green Party?
You say your political position is left-wing libertarian, and this is a valid use of the word libertarian in this project? If you really believe that, why didn't you join the Libertarian/Green Team?