Minimum wage

[14] By the early 19th century, the Statutes of Labourers was repealed as the increasingly capitalistic United Kingdom embraced laissez-faire policies which disfavored regulations of wages (whether upper or lower limits).

[35] Among these are general economic conditions as measured by real and nominal gross domestic product; inflation; labor supply and demand; wage levels, distribution and differentials; employment terms; productivity growth; labor costs; business operating costs; the number and trend of bankruptcies; economic freedom rankings; standards of living and the prevailing average wage rate.

Proponents argue that raising the minimum wage can help reduce income disparities, enabling low-income workers to afford basic necessities and contribute to the overall economy.

According to the supply and demand model of the labor market shown in many economics textbooks, increasing the minimum wage decreases the employment of minimum-wage workers.

A number of economists, such as Pierangelo Garegnani,[49] Robert L. Vienneau,[50] and Arrigo Opocher and Ian Steedman,[51] building on the work of Piero Sraffa, argue that that model, even given all its assumptions, is logically incoherent.

[52] Graham White argues, partially on the basis of Sraffianism, that the policy of increased labor market flexibility, including the reduction of minimum wages, does not have an "intellectually coherent" argument in economic theory.

[59] Specifically, these models focus on labor markets with frictions and may result in positive or negative outcomes from raising the minimum wage, depending on the circumstances.

Taken in sum with the previous section, the minimum wage in labor markets with frictions can improve employment and decrease the unemployment rate when it is sufficiently low.

For example, Edward Gramlich in 1976 found that many of the benefits went to higher income families, and that teenagers were made worse off by the unemployment associated with the minimum wage.

[62]Wellington (1991) updated Brown et al.'s research with data through 1986 to provide new estimates encompassing a period when the real (i.e., inflation-adjusted) value of the minimum wage was declining, because it had not increased since 1981.

Card and Krueger surveyed employers before the April 1992 New Jersey increase, and again in November–December 1992, asking managers for data on the full-time equivalent staff level of their restaurants both times.

In 1996, David Neumark and William Wascher reexamined Card and Krueger's results using payroll records from large fast-food chains, reporting that minimum wage increases led to decreases in employment.

Their initial findings did not contradict Card and Krueger, but a later version showed a four percent decrease in employment, with statistically significant disemployment effects in some cases.

[82] A 2019 paper in the Quarterly Journal of Economics argued that job losses in studies like those of Meer and West are driven by unrealistic assumptions and that minimum wage effects are more complex.

[85] A 2019 study in Arizona suggested that smaller minimum wage increases might lead to slight economic growth without significantly distorting labor markets.

[87] The Congressional Budget Office's 2019 report on a proposed $15 federal minimum wage predicted modest improvements in take-home pay for those who retained employment but warned of potential job losses, reduced hours, and increased costs of goods and services.

[101] A 2008 meta-analysis by Doucouliagos and Stanley supported Card and Krueger's findings, showing little to no negative association between minimum wages and employment after correcting for publication bias.

[2] In April 2010, the Organisation for Economic Co-operation and Development (OECD) released a report arguing that countries could alleviate teen unemployment by "lowering the cost of employing low-skilled youth" through a sub-minimum training wage.

[150] Because of this overall positive development, the Deutsche Bundesbank revised its opinion, and ascertained that "the impact of the introduction of the minimum wage on the total volume of work appears to be very limited in the present business cycle".

[156] According to a 2019 review of the academic literature by Arindrajit Dube, "overall, the most up to date body of research from US, UK and other developed countries points to a very muted effect of minimum wages on employment, while significantly increasing the earnings of low paid workers.

[166] Daniel B. Klein and Stewart Dompe conclude, on the basis of previous surveys, "the average level of support for the minimum wage is somewhat higher among labor economists than among AEA members.

34% of respondents agreed with the statement, "Raising the federal minimum wage to $9 per hour would make it noticeably harder for low-skilled workers to find employment."

47% agreed with the statement, "The distortionary costs of raising the federal minimum wage to $9 per hour and indexing it to inflation are sufficiently small compared with the benefits to low-skilled workers who can find employment that this would be a desirable policy", while 11% disagreed.

This policy is more targeted against poverty than the minimum wage, because it avoids subsidizing low-income workers who are supported by high-income households (for example, teenagers still living with their parents).

"[174] The ability of the earned income tax credit to deliver larger monetary benefits to the poor workers than an increase in the minimum wage and at a lower cost to society was documented in a 2007 report by the Congressional Budget Office.

[185] Having more skills makes workers more valuable and more productive, but having a high minimum wage for low-skill jobs reduces the incentive to seek education and training.

The Spanish government sets the "Interprofessional Minimum Wage" (SMI) annually, after consulting with the most representative trade unions and business associations, for both permanent and temporary workers, as well as for domestic employees.

The minimum wage was introduced in Spain in 1963 through Decree 55/1963, proposed by Jesús Romeo Gorría, the Minister of Labor during Francisco Franco's IX Government.

The debate centres on whether it's a useful tool to help maintain the purchasing power of those who retain their jobs, or it's not effective because it adds pressure to the growth of prices and increase the likelihood of inflation becoming entrenched.

[206] The first federal minimum wage was instituted in the National Industrial Recovery Act of 1933, signed into law by President Franklin D. Roosevelt, but later found to be unconstitutional.