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.
result in a high minimum labour cost, thereby reducing employment
But the notion of requiring minimum wage floors
on other types of service contracts is relatively new.
While the research on disemployment effects appears to settle (for many, at least) a question regarding the labor demand effects of mandated wage floors
, it does not answer the question of whether minimum wages raise incomes of low-wage workers, or more importantly of poor or low-income families.
(16.) A wage floor
fixed by legislation or collective bargaining agreements can prevent this assumption from being satisfied (Gilman 1965).
It is unclear, however, to what extent nonunion workers - particularly nonwhite workers in small firms - are able to legally enforce these minimum wage floors
This is because the largest negative effects of tax wedges on labour demand arise because of the inter-action with wage floors
that are established following central wage agreements, and which limit the possibility of shifting the incidence of tax (from employer to employee) and so effectively increase the minimum cost of labour.
These are most likely to occur in markets where wage floors
prevent employers from expressing tastes for discrimination in the form of wage differentials.
in the Clothing Industry, 1950-1981." Department of Employment Research Paper No.
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.
Much of this variation is attributable to the presence of state-specific wage floors
above the federal rate.