Quotation of the Day…

by Don Boudreaux on November 9, 2013

in Reality Is Not Optional, Seen and Unseen, Work

… is from Linda Gorman’s 2007 essay “Minimum Wages” in the indispensable Concise Encyclopedia of Economics (David R. Henderson, ed.) (footnote and link original):

In addition to making jobs hard to find, minimum wage laws may also harm workers by changing how they are compensated.  Fringe benefits – such as paid vacation, free room and board, inexpensive insurance, subsidized child care, and on-the-job training – are an important part of the total compensation package for many low-wage workers.  When minimum wages rise, employers can control total compensation costs by cutting benefits.  In extreme cases, employers convert low-wage full-time jobs with benefits to high-wage part-time jobs with no benefits and fewer hours.  David Neumark and William Wascher found that a 10 percent increase in minimum wages decreased on-the-job training for young people by 1.5–1.8 percent.6   Since on-the-job training is the way most people build their salable skills, these findings suggest that minimum wage laws also reduce future opportunities for the unskilled.


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