Hitting lowest paid just doesn't add up
Published 29/11/2010 | 05:00
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.