Economic history in the present: The wage fund and the minimum wage

How many bushels of wheat do you make a year? While this is not the most relevant question to be asking about wages today, some of the discussion around the minimum wage is taking inspiration from a very old economic idea according to which questions like this would be right at home. The idea is that of a “wage fund”: a fixed amount of total wages available to an economy for a given period that dictates the average wage. If such a fund exists, then any aim to raise wages within the period for which the fund is fixed will inevitably end up harming workers – most likely those with the lowest wages and the least power. Today’s arguments against increasing the minimum wage at times mirror this flawed logic – and for reasons that, oddly enough, reflect on why the theory was discarded in the first place

Read more.


Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s