Tuesday 25 July 2017

Hitting lowest paid just doesn't add up

CUTTING the minimum wage is nonsense economically. Reducing wages would at best do nothing for employment; more likely it would do the opposite.

Here's how the fallacy works: if some subset of the workforce accepts lower wages, it can gain jobs.

If workers in the car industry take a pay cut, this will lead to lower prices of cars relative to other things, so people buy more, hence more employment.

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