“The results indicate that these regulations, especially minimum wage policy, contribute to higher unemployment rates and constraint formalization in Morocco, especially for youth and women.”
For anyone who still thinks minimum wage laws help people get ahead or climb the economic ladder… first you must actually be able to reach the first rung on the ladder!
Have you ever wondered why there is a Department of Labor? Why isn’t the Department of Commerce enough to represent the interests of everyone in the business world? If something is good for commerce, that usually means businesses are growing and hiring and paying higher wages. Isn’t that also good for workers?
The idea that management and labor are invariably at odds is a Marxist idea. Which is to say, it’s outside mainstream economics. Similarly, the idea that government intervention can help labor in its struggle against management is also contradicted by what mainstream economists know. Labor market regulations that help some workers, often do so at the expense of other workers. More often than not, intervention makes all workers worse off.
Despite controversies that rage over immigration, it is hard to see how anyone could be either for or against immigrants in general.
Both in the present and in the past, some immigrant groups have made great contributions to American society, and others have contributed mainly to the welfare rolls and the prisons. Nor is this situation unique to the United States. The same has been true of Sweden and of other countries in Europe and elsewhere.
Sweden was, for a long time, one of the most ethnically homogeneous countries in the world. As of 1940, only about one percent of the Swedish population were immigrants. Even as the proportion of immigrants increased over the years, as late as 1970 90 percent of foreign-born persons in Sweden had been born in other Scandinavian countries or in Western Europe.
These immigrants were usually well-educated, and often had higher labor force participation rates and lower unemployment rates than the native Swedes. That all began to change as the growing number of immigrants came increasingly from the Middle East, with Iraqis becoming the largest immigrant group in Sweden.
This changing trend was accompanied by a sharply increased use of the government’s “social assistance” program, from 6 percent in the pre-1976 era to 41 percent in the 1996-1999 period. But, even in this later period, fewer than 7 percent of the immigrants from Scandinavia and Western Europe used “social assistance,” while 44 percent of the immigrants from the Middle East used that welfare state benefit.
Immigrants, who were by this time 16 percent of Sweden’s population, had become 51 percent of the long-term unemployed and 57 percent of the people receiving welfare payments. The proportion of foreigners in prison was 5 times their proportion in the population of the country.
While economists are famous for their disagreements (and their incompetent forecasts), there is universal consensus in the profession that demand curves slope downward. That may be meaningless
And this is why it makes no senseto impose minimum wage requirements, or to increase mandated wages where such laws already exist.
If you don’t understand this, just do a thought experiment and imagine what would happen if the minimum wage was $100 per hour. The answer is terrible unemployment, of course, which means it’s a very bad idea.
So why, then, is it okay to throw a “modest” number of people into the unemployment line with a “small” increase in the minimum wage?
The entire video was very concise, lasting less than four minutes, so it only scratched the surface. For those seeking more information on the topic, I would add the following points.
- Businesses will never create jobs unless they expect that new employees will generate enough revenue to cover not only their wages, but also the cost of taxes, regulations, and mandates. This is why policies that sometimes sound nice (higher minimum wages, health insurance mandates, etc) actually are very harmful.
- Redistribution programs make leisure more attractive than labor. This is not only bad for the overall economy because of lower labor force participation. This is why policies that sometime sound nice (unemployment benefits,food stamps, health subsidies, etc) actually are very harmful.
The American economy is in the doldrums. And has been for most this century thanks to bad policy under both Obama and Bush. So what’s needed to boost growth and create jobs? A new video from …
Back in 2010, then-House Speaker Nancy Pelosi actually claimed that paying people not to work would be good for the economy. Wow, that’s almost as bizarre as Paul Krugman’s assertion that war is good for growth. Professor Dorfman of the University of Georgia remembers Pelosi’s surreal moment and cites it in his column in Forbes, […]