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Thursday, January 05, 2017

Down Under Minimum Wage

I mentioned offhandedly at the end of my Fixer vs. Solver essay that minimum wage is an example of the (bad) Fixer approach. In a discussion recently I claimed (mostly from first principles per my essay but also with scattered empirical support such as it is with political topics) that min wage hurts especially teens, the disabled, and those who want to transition to a new career. In response, someone cited Australia as a great example of how well minimum wage works, which I love because it turns out to be a textbook example of a fixer patch job that just happens to have patches all over exactly the classes I had mentioned:

Minimum Wages in Australia: Adult, Junior, Apprentice

Note the title, footnotes, and in particular that they've added carve-outs for teens, disabled, and apprentices.

Gotta love their textbook fixer patch: all 17 year olds are worth 57.8% of all 21 year olds! If that's not welding the steering wheel straight I don't know what is.

Now if they would just keep adding carve-outs until it stops disadvantaging anyone, it will be completely inert and they can just remove it altogether. (But they won't--they'll carve it out only until the people it screws are too few in number to fight back, which is probably about where it is now.)

Note also that their min wage is just over $10/hr in US dollar purchasing power parity terms--all the way down to less than $4/hr for mid teens!

Keep this factoid in mind next time someone cites Australia as proof that Seattle's across-the-board $15/hr min wage will be a great thing. And grab some popcorn for the patching party to follow.

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Simon Funk / simonfunk@gmail.com