Government wage controls of any kind, whether a wage floor
, ceiling, or freeze throw a wrench into labor markets and reduce the efficiency of the economy.
If we really care about maximizing employment opportunities, we would put a much higher priority on full-employment fiscal and monetary macroeconomic policy, minor variations in which have had massively greater employment effects than even the highest statutory wage floors
that have been proposed.
31) Using the Streeck and Thelen (2005) typology of change, this can be categorized as "conversion" of a tool to guarantee a wage floor
at least partially into a tool for wage moderation (see also Salverda, Van Klaveren and Van der Meer, 2008).
Although no statutory minimum wage exists in Finland, the collective agreements specify wage floors
for different types of jobs and experience levels.
Several factors inform the establishment of the wage floor
3) Thus, while there is generally no single measure with which the distributional effects of a policy can be assessed unambiguously, and while overall welfare effects are much more complicated, evaluating the impact of mandated wage floors
on poverty is quite relevant to the policy debate.
The extent to which discrimination is expressed by refusals to hire because of wage floors
cannot be predicted a priori because it depends on worker productivity, workers' reservation wage functions, the strength of employers' tastes for discrimination, and the prevalence and structure of wage floors
It is unclear, however, to what extent nonunion workers - particularly nonwhite workers in small firms - are able to legally enforce these minimum wage floors
At the very least, future central wage agreements should avoid specifying minimum absolute changes in wages which tend to lead to further compression of wages at the lower end and, as argued previously, any sectoral wage floors
should separately distinguish younger employees.
This excludes the possibility, suggested by Gilman (1965), that a federally mandated minimum wage, or a collectively bargained wage floor
, translates wage discrimination into reductions in the employment of minority workers.
Even worse are proposals to establish wage floors
for high-skilled immigrants based on prevailing domestic wages to ensure that high-skill visas are not used to undercut American workers.
This variation provides a simple natural experiment for measuring the effect of legislated wage floors
, with a "treatment effect" that varies across states depending on the fraction of workers initially earning less than the new minimum.