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Mr. Federal Way draws erroneous conclusions about minimum wage | Letter
It’s odd that during the holiday season, Mr. Federal Way should extol the virtues of Scrooge.
Mr. Federal Way fantasized about the effects of increasing the minimum wage and falsely concluded that increasing the minimum wage to $15 an hour would lead to a decrease in employment.
Fortunately, we have data to disabuse Mr. Federal Way of his erroneous conclusions.
Princeton economists David Card and Alan B. Krueger studied the effect of an 18.8 percent wage increase for workers in New Jersey. Neighboring Pennsylvania retained its old minimum wage. Interestingly enough, they compared employment at fast food restaurants.
This study, carried out over an 11 month period, was during a recession. The results? No change in relative employment. Tiny Tim 1, Scrooge 0.
The argument for raising the minimum wage should be even more persuasive for employers. Raising the minimum wage leads to more productive employees because employee turnover decreases. Tiny Tim 2, Scrooge 0.
And interestingly enough, sales increase. We all know about how Henry Ford paid his workers well because he wanted them to be able to afford his cars. Economists study the disparity of income using a measure called the Gini coefficient. The higher the Gini, the greater the disparity in incomes.
Studies indicate that economies grow faster when the Gini is low. This makes sense because putting more money in the hands of the working poor means that they can afford to buy things and that translates into increasing demand. Tiny Tim 3, Scrooge 0.
And the argument for increasing the minimum wage gets even better.
You see the government supplements the income of the working poor through programs like food stamps.
These are really government subsidies to minimum wage payers like Walmart and McDonald’s. Tiny Tim 4, Scrooge 0.
And finally, there is the argument for decency. Why should we stand mute when we see needless poverty?
Paul Levy, Federal Way