A New Policy Think Tank

Well, there is a new policy think tank in Canada and they have just released a commentary on the minimum wage. 

The Northern Policy Institute began operations over the last year (I am a member of the Research Advisory Board) with a primary mission to provide evidence based research on the challenges and opportunities facing Northern Ontario.  However, they also are generating policy work with a broader audience in mind as their recent offering on minimum wages demonstrates.

The commentary's author is Morley Gunderson and the long and short of the piece is that minimum wage legislation makes for good politics but poor economics.  Gunderson recommends that: i) the discourse around minimum wages needs to place more emphasis on the adverse employment effects; ii) increases should be flexible and dependent on the state of the economy; iii) adjustments should be continuous small increases rather than large and infrequent; and iv) minimum wage increases should not be used as a poverty reduction tool.

You can check out the report and visit the NPI web site.

 

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The Real Minimum Wage

Comments

[Ralph Musgrave]

I wish to announce that I'm a think tank :-)

[Livio Di Matteo]

If I may borrow from Richard Nixon, we are all think tanks now!:-)

[Min]

People are corporations, my friend. ;)

[Bill Long]

To quote a friend:- "Pay people less ! We all get rich !" Yes.

[Steve Ambler]

The author gives a good summary of the negative economics effects of minimum wages. After listing some of the possible mitigating effects, he writes "Clearly there are a variety of potentially offsetting factors that could at least mitigate some of the otherwise potential adverse consequences of minimum wages. In many cases, however, they carry other adverse consequences for workers. In other cases, they are ones that employers would have an incentive to apply even without the prompting from government induced minimum wage increases." Given this, I was surprised at the conclusion that "This is not meant to imply that minimum wage laws should be repealed or even that they be frozen at current levels." It seems to be precisely what the analysis does imply. Perhaps the author realizes that the appeal to politicians and interest groups (summarized on page 9) is just too strong.

[genauer]

@ Livio,

an off-topic comment. Remember the discussion about OECD life expectancy depend on being easter european, and presumably, the fraction of uninsured, like in the US and Mexico?

The first effect was clear, there were plent of points.

And for the second, I stumbled now about the counter argument. Ireland has also large numbers of uninsured, but life expectancy at 80.x years.

There is something other specific about the US to cut 2 years of the average life.