[Sauron]

Originally Posted by ManM

Perhaps an economist could explain to Pelosi how a minimum wage increase would affect the labor market.]

Or perhaps you can tell us what you think would happen.

Then I can list the reasons why you're wrong.

Ok.
An increase in minimum wage will increase the cost of unskilled American labor.

Except that the data doesn't indicate that.

To the amazement of classical economists who predicted that a hike in the minimum wage would reduce the number of people being employed at the margin, as well as put small business owners out of business, the reality has been quite the opposite.

Minimum wage. Conservatives have spilled a lot of ink attacking a minimum wage hike. The main gripes: a wage hike will raise unemployment, and will bite into profits and raise consumer costs, spurring inflation; and most minimum-wagers are wealthy teenagers working summer jobs. Don't believe it. John Kerry's proposal to raise the federal minimum wage from $5.15 to $7 makes eminent sense.

Critics rarely offer actual empirical evidence that wage hikes increase unemployment. In fact, past increases in the U.S. -- in 1990-91 and 1995-96 -- had a negligible effect on employment. (Britain and Australia had similar experiences.) Moreover, the Economic Policy Institute (EPI) has debunked the oft-invoked myth according to which states that recently raised wages suffered high unemployment as a result. There was a correlation, but alas, no causation. And as for the "wealthy teenager" argument, consider that after the 1995-96 increase, 35 percent of the gains went to the poorest 20 percent of the population. It was a progressive success, and if a few upscale teenagers also benefit, well, more power to them.

4) Redistribute wages. Compensate for the increased cost of unskilled labor by devaluing skilled labor. This makes it harder for a business to compete for the skilled labor it needs.

Except that an increase in the minimum wage does not devalue skilled labor. The going rate for a doctor does not drop, merely because a McDonald's worker makes an extra $1.15 an hour. If anything, the opposite occurs: the value of the doctor's services would rise, due to the increased buying power of the McDonald's worker.

5) Outsource. As the price of American unskilled labor goes up, its value on the global market goes down. This isn't much of a minimum wage problem any more, as the industries that rely on minimum wage labor for production have largely already left for greener pastures, such as China.

Unskilled labor has never been a candidate for outsourcing, so this particular rationale is way off base. The jobs that are candidates for offshoring were blue collar and mechanical / skilled workers, especially those with high medical or pension costs.

So far, this should not be controversial.

Oh, it's not controversial. Just terribly incorrect, that's all.

So, feel free to list the reasons why I'm wrong.

The chief reason is because the ceterus paribus conditions that you are relying upon are not even close to being in force, in the real world.

A secondary reason - one goal of the reasons for a minimum wage is to reduce dependency on govt programs. So the existence of a minimum wage can be offset by reductions in state support, and taxes lowered (or redirected) accordingly.

Care to try again?