“An increase now will boost income for the poorest workers without the danger of creating more unemployment.”, states the New York Times in September 1999. Is this statement about an increase in minimum wage really true? There are two sides to the debate about minimum wage that both hold valid points. The minimum wage is a major issue in the world of economics and politics. Political figures often prey on the public’s general ignorance of economics and promise to increase the minimum wage. Economists ,on the other hand, view the long term effects and see the damage it can cause. David Card and Alan Kruegur, two economists at Princeton University conducted a study in April 1992 on New Jersey’s 18% minimum wage increase while Pennsylvania’s minimum wage remained the same. They measured the change in employment in the state’s fast – food restaurants between February and December that year. Card and Kruegur found that the number of jobs grew in restaurants where pay had to rise, compared with those already paying more than minimum was and compared with joints in neighboring Pennsylvania, where the minimum did not change. The study also found no difference between high- and low- wage states. Most people would be delighted to here the above. They would receive more money and their standard of living would increase. But most people do not take into account the negative side effects of increasing the minimum wage. The survey taken by Card and Kruegur was done over the telephone. Fellow economists charge that the questions were vague and errors crept into the numbers. Another study was done using the businesses payrolls found that New Jersey fared far worse than Pennsylvania. Positive effects of the minimum wage can be the obvious; more money for people. They would have more money to spend , the economy would boom and everyone would be happy. Not so; in fact, this would only encourage inflation and inc...
