Comment 28383

By A Smith (anonymous) | Posted January 30, 2009 at 14:16:00

Ryan, >> Based on the evidence, I'd say it wouldn't make a difference, except that people making the lowest incomes would be in even worse shape than they are today.

Then why is it that firms lay people off when the economy slows? If wage costs are not an issue to employers, then they shouldn't fire anyone.

>> This is a read herring. Businesses will cut jobs regardless of whether a minimum wage exists

Businesses don't care about cutting jobs, they care about cutting labour costs, there is a difference. In fact, if Walmart could double the size of their workforce, thus increasing their output, they would, so long as they could keep acceptable (to them) profit margins.

>> As I already pointed out, unemployment is not rising because of the minimum wage; it's rising because of a global economic crisis.

Wrong, unemployment is rising because total labour costs are too high relative to sales. If labour costs were brought down (by decreasing the minimum wage), businesses could keep the same number of people employed and still retain reasonable profit margins.

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