Critique of an Article: Wage Gains for Low Earners Have Helped Sustain America’s Economic Expansion.
The Great Recession was the worst U.S. economic downturn since the Great Depression in the 1920s and ’30s.
They may need to have a short enough commute. They may enjoy working with certain people. And they may have strong preferences about the communities in which they live. Furthermore, searching for a job in the labor market takes time and energy. All potential job offers are not immediately observable by all workers who might accept them. Both of these facts mean that employees will only slowly respond to wage changes at their jobs. They may poke around the web for new job listings or they may ask their friends or former colleagues about possible job opportunities. None of this happens quickly, however, giving firms monopsony power over their workforces. Monopsony power hinders wage growth for workers, which, in turn, slows consumer demand and reduces overall savings in the U.S. economy.
(David Cooper, 2019)
Raising the federal minimum wage will also stimulate consumer spending, help businesses’ bottom lines, and grow the economy. A modest increase would improve worker productivity, and reduce employee turnover and absenteeism. It would also boost the overall economy by generating increased consumer demand.
David Cooper, Raising the Federal Minimum Wage to $15 by 2024 Would Lift Pay for Nearly 40 Million American Workers, Economic Policy Institute, February 2019.
Congressional Budget Office, An Update to the Economic Outlook: 2018 to 2028, “10-Year Economic Projections”, August 2018.
Sylvia Allegretto and David Cooper, Twenty-Three Years and Still Waiting for Change: Why It’s Time to Give Tipped Workers the Regular Minimum Wage, Economic Policy Institute, July 2014.
Paul J. Wolfson and Dale T. Belman,“15 Years of Research on U.S. Employment and the Minimum Wage,” Tuck School of Business Working Paper no. 2705499, December 2016.
Isaiah Andrews and Maximilian Kasy, “Identification of and Correction for Publication Bias,” Mimeograph, October 10, 2018.