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Quotation of the Day…

Posted By Don Boudreaux On November 9, 2013 @ 8:13 am In Reality Is Not Optional,Seen and Unseen,Work | Comments Disabled

… is from Linda Gorman’s 2007 essay “Minimum Wages [1]” 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 [2], 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 [3]   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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URLs in this post:

[1] Minimum Wages: http://www.econlib.org/library/Enc/MinimumWages.html

[2] insurance: http://www.econlib.org/library/Enc/Insurance.html

[3] 6: http://www.econlib.org/library/Enc/MinimumWages.html#lfHendersonCEE2-111_footnote_nt309

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