Tuesday, April 21, 2009

Does a high minimum wage increase unemployment?

As Oregon's unemployment rate climbs past 12% in March 2009, some state legislatures are beginning to question whether or not the state's high minimum wage (along with automatic increases in line with inflation), share part of the blame.

Rick Attig of the Oregonian addresses the issue in an interesting report.

There are economists out there that argue that when you raise the price of a good or service (i.e. minimum wage) the demand for the goods & services decline (i.e. rising unemployment rate).

The state legislature recognizing this is interested in passing a bill that would not allow inflationary adjustments to the hourly wage of low income workers whenever the state's unemployment rate is higher than the national unemployment rate.

In a related story, a recent study has shown that raising minimum wage has hindered teenagers' abilities to land a job.

No comments: