Quote:
Originally Posted by iggy_oi
They gave a raise to their minimum wage/low paid workers and their business profited, they raised their average wage by 16% and the consumer costs only rose 2%. Sounds like a lot of myth debunking, but not an argument against raising minimum wage.
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The theory here is an efficient wage. It's essentially a psychological argument that says the employee who is making more than the usual wage for his/her position will apply more effort to the job. And it works. It works great. However when you artificially mandate a higher minimum wage that psychological commitment and motivation goes out the window. You can pay someone twice as much but if that is the least possible amount they could get for doing the same job anywhere else, why bother with trying to earn that wage?