Monday, May 04, 2009

Views from Across the Aisle

I like to read the opinions of people with whom I normally would disagree. I think if you can't understand where the other side is coming from, you can't have any sort of productive conversation with them.

This is an interesting article about wages in the current economy.

Of note: "And soon we may be facing the paradox of wages: workers at any one company can help save their jobs by accepting lower wages, but when employers across the economy cut wages at the same time, the result is higher unemployment.

Here’s how the paradox works. Suppose that workers at the XYZ Corporation accept a pay cut. That lets XYZ management cut prices, making its products more competitive. Sales rise, and more workers can keep their jobs. So you might think that wage cuts raise employment — which they do at the level of the individual employer.

But if everyone takes a pay cut, nobody gains a competitive advantage. So there’s no benefit to the economy from lower wages. Meanwhile, the fall in wages can worsen the economy’s problems on other fronts."

My question would be... isn't the same thing true of the minimum wage, but in reverse? If everyone's wages are shifted upward, then we don't gain anything except inflation. It's why I don't care much for changing the minimum wage, but why I don't get too worked up over it either.

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