Home > Uncategorized > Guess Who Opposes Minimum Wage Increases? Now, Guess Why?

Guess Who Opposes Minimum Wage Increases? Now, Guess Why?

Ilyana Kuziemko and Michael I. Norton find something surprising about who favors and opposes minimum wage increases:

In our surveys, we asked Americans whether they supported an increase to the minimum wage, currently $7.25 per hour. Those making $7.25 or below were very likely to support the increase – after all, they would be immediate beneficiaries. In addition, people making substantially more than $7.25 were also fairly positive towards the increase. Which group was the most opposed? Those making just above the minimum wage, between $7.26 and $8.25.

But why?

They attribute this to something they call “last place aversion.”

Students in my most recent class, if they were following closely, have another way of looking at this result.

For which group would unemployment likely increase the most if the minimum wage is increased?
a) those making minimum wage or below? (the article doesn’t explain how people can make below minimum wage, so make an assumption)
b) those making just above the minimum wage?
c) those making well above minimum wage?

It’s clear on which group the price floor will become binding, isn’t it?

Is it possible low-wage workers are smarter than Kuziemko and Norton give them credit for being?

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Categories: Uncategorized
  1. Sheilla
    October 30, 2011 at 9:21 pm

    (a) for those who making minimum wage or below. (price floor is binding because their equilibrium wage is lower than the price floor)
    because increasing the minimum wage will cause the demand curve shift to the right, firms will hire less than before. because they hire less, they will hire someone with higher skills and much experience. those who making minimun wage or below of course have least skill and experience than those who making just above the minimum wage. so its still hard for them to get a job. because they don’t have a job they probably will accept lower wage, and still making minimum wage or bellow. and also, by increasing the minimum wage will cause people, who doesn’t seek for a job at first, want to get a job now and it will increase the number of unemployement.
    (b) for those who making just above, increasing minimum wage will make them better off and (c) for those who making well above the minimum wage, increasing the minimum wage will not affect them because their equilibrium wage is well above the price floor.

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