Wednesday, February 20, 2013

History of minimum wage and unemployment

With regards to the historical record and the minimum wage, maybe we'd do well to see what's happened with unemployment, and how it correlates to minimum wage hikes.  Here is the history of the minimum wage, and here is the history of unemployment in the United States.

From the first link, we learn that hikes in the minimum wage appeared in 1938, 1946, 1950, 1956, 1962, 1964, 1967, 1968, from 1975 to 1981, in 1991 and 1992, in 1997 and 1998, and from 2007 to 2009.

From the second link, we learn that unemployment spiked in  1938, 1946, 1950, 1958, from 1976 to 1982, from 1991 to 1993, and of course from 2008 to 2010.   In short, every increase in the minimum wage except for those in the 1960s and the 1997-8 increases were accompanied by corresponding increases in unemployment.  During the 1960s, of course, many prospective minimum wage earners were sent to work in a place called "Vietnam", and in 1997 and 1998, the dot-com boom was still underway. 

In short, we're seeing exactly what sound economists would predict.  When the economy is sound, increasing the minimum wage is meaningless because people are already earning more than the minimum wage.  When it is not, it's suicidal because it puts otherwise-employable workers into a situation where they must demand a wage that is higher than their productivity.  That situation is--at least among smart businessmen--called "unemployment."


Anonymous said...


Check this out:

Reading List: Pro-Western Christianity

There's quite an interesting debate in the comments of the above thread.


tobin said...

There you go again, applying research and common sense. There's no place for that in politics!

Bike Bubba said...

Tobin: :^). One would have hoped, however, that a bit of basic analysis like this would have found its way into the discipline of economics, no?

Really, what we have here is either an amazing propensity of politicians to raise the minimum wage just as the economy is tanking (not something I can dismiss out of hand), or the minimum wage hikes have been helping the economy to tank. Even Keynesians ought to be able to take a serious look at the question.