The Effects of Minimum Wages on Employment: Theory and Evidence from Britain. Consider the abstract:
Unfortunately, this is the kind of empirical research that the utopian rightists aren't interested in looking into; they'd rather engage in horrible misinterpretations of Adam Smith or copy and paste something from mises.org.Recent work on the economic effects of minimum wages has stressed that the standard economic model, where increases in minimum wages depress employment, is not supported by empirical work in some labor markets. We present a general theoretical model whereby employers have some degree of monopsony power, which allows minimum wages to have the conventional negative impact on employment but which also allows for a neutral or positive impact. Studying the industry‐based British Wages Councils between 1975 and 1992, we find that minimum wages significantly compress the distribution of earnings but do not have a negative impact on employment.
Minimum Wages and Employment: A Case Study of the Fast Food Industry in New Jersey and Pennsylvania. Again, consider the abstract.
I have a feeling some of us should be reading that instead of Henry Hazlitt.On April 1, 1992 New Jersey's minimum wage increased from $4.25 to $5.05 per hour. To evaluate the impact of the law we surveyed 410 fast food restaurants in New Jersey and Pennsylvania before and after the rise in the minimum. Comparisons of the changes in wages, employment, and prices at stores in New Jersey relative to stores in Pennsylvania (where the minimum wage remained fixed at $4.25 per hour) yield simple estimates of the effect of the higher minimum wage. Our empirical findings challenge the prediction that a rise in the minimum reduces employment. Relative to stores in Pennsylvania, fast food restaurants in New Jersey increased employment by 13 percent. We also compare employment growth at stores in New Jersey that were initially paying high wages (and were unaffected by the new law) to employment changes at lower-wage stores. Stores that were unaffected by the minimum wage had the same employment growth as stores in Pennsylvania, while stores that had to increase their wages increased their employment.
As a whole, the adoption of an approach able to note the negative deficiencies of oligopsonistic conditions in labor markets, the self-correcting balance of supply and demand absent from the imperfections of market deficiencies as a whole, and the presence of market disequilibria, negative externalities, inherent inefficiencies, etc., enables us to note that various facets of capitalism are rather unpleasant indeed.While it is true that every dollar's worth of production generates exactly a dollar's worth of income or potential purchasing power, it is not necessarily true that a dollar's worth of income always generates a dollar's worth of demand for goods and services. Aggregate demand can be greater than income if all actors in an economy as a whole use previous savings, or wealth, to spend more than their current income, or if actors in the economy as a whole borrow against future income. And aggregate demand can be less than income if actors in the aggregate spend less than current income, saving and adding power of current income to their stock of wealth.