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Source link: http://blog.mises.org/10926/maximum-confusion-over-minimum-wages/

Maximum Confusion over Minimum Wages

October 28, 2009 by

Common sense and a few basic concepts can guide most people through economic issues. One small step of reason on the minimum-wage issue could be a giant leap for all mankind. FULL ARTICLE D.W. MacKenzie

{ 2 comments }

David Roemer October 28, 2009 at 9:53 am

Everyone now knows that minimum wage laws don’t increase wages and cause unemployment. Everyone is now in favor of minimum wage laws because of the impact it has on immigration. Full employment is interpreted by many to be a labor shortage to be remedied by increasing immigration. Before the collapse of the Soviet Union and liberalism, conservatives were against minimum wage laws and liberals were for them. Now, Democrats and Republicans fight about the minimum wage for political reasons.

Alex October 28, 2009 at 12:36 pm

There is no confusion over the concept of a real minimum wage. Those who object to a reduction in the nominal wage to match decreases in the price level do so solely because they want workers to get higher real wages.

Of course, higher real wages are possible in the long run only by increases in productivity. But those like Acorn and some in Congress and the present administration don’t like that answer because they want a redistribution of income, in spite of the fact that that tack would likely lower long run productivity and hence attain lower average real wage rates. Such redistributionists are quite willing to trade a reduction in average incomes for a more even income distribution.

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