A rant about raising the minimum wage

I don't discuss economics all that much on my blog because it isn't well read.  I don't want to turn off what few readers I have.  None the less I want to get this off my chest and Usenet just isn't what it used to be.

I'll start with something that happened where I worked in the mid 1980s.  My employer was the defendant in a class action law suit where several women held they weren't being paid the same as their male counterparts doing the same job.  The truth was they weren't doing the same job but a different job with some surface similarities.  They won and a study was done to determine the appropriate pay based upon daily activities.  We were asked how much time we spent in front of the computer terminal entering code.  From this and other factors the new pay scale was set.  My employer retrained many of the keypunch operators into other fields then we programmers quite having to fill out coding forms for the keypunch operators and just entered the code ourselves.  For some of the older programmers this was traumatic but most of us thought having to spend a lot of time printing in the boxes with the proper slashing of zeros, zeds, and sevens, underlining the number one, etc.  So many of the women lost their jobs where a few found new jobs actually doing what the men were doing to earn their pay.

Many extrapolate from cases like the one I experienced to the conclusion that when minimum wage goes up people lose their jobs even though such extrapolation is unfounded.

People compete for jobs.  When more qualified people compete for the same jobs the employers can offer lower wages.  It's all supply and demand.  This even holds for jobs the employer would be more than willing to pay more to have done if the labor supply wasn't so loose.  It might be hard to determine how many jobs fall into this category but it isn't impossible.

One might wonder how the preferences of minimum wage labor would be affected by rising wages.  I'm certainly not willing to make a hard prediction on the matter.  If their consumption is primarily from their own production then the effective prices will rise with their wage and no changes will be felt except possibly those marginally above the minimum who have been able to buy superior goods where those at minimum have to settle for inferior goods.

If any of us who earn well about the minimum feel any pain at all when the minimum wage rises it's because we have been taking advantage of others who due to structural unemployment cannot demand the wage we are really willing to pay given the fact that we are feeling any pain by its lifting.  Maybe there are a few things we would go without having done.  If so those things are of marginal benefit to us anyway so there isn't much pain.

I'm pretty sure aggregate demand will go up with minimum wage given our current structural problems.  Unfortunately the tax code favors the current lopsided distribution of wealth.  I fear that until the tax code is fixed lifting the minimum wage will only have short term benefits.