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I am reading about a new bill to lower the minimum wage in Puerto Rico from \$7.25 to \$4.25 per hour. This comes at a time, when both the New York and California have chosen to raise their minimum wages from \$9/hr to \$15/hr.

Are there any theories of how this affects work in a population?

Have any economists chimed in on the topic of minimum wage in general in general? Can any of it be used to predict what will happen to PR?


Why might policy makers feel a decrease is warranted in one situation while an increase is warranted in another?

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    $\begingroup$ Possible duplicate of What is the economic purpose of increasing the minimum wage? $\endgroup$ – FooBar Apr 18 '16 at 16:43
  • $\begingroup$ Please use the search function before posting. I've selected one question that already answers this, but the search function will immediately show you (at least) 5 questions related to the theoretical and actual impact of minimum wages: economics.stackexchange.com/search?q=minimum+wages $\endgroup$ – FooBar Apr 18 '16 at 16:44
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    $\begingroup$ @FooBar I am asking about decreasing the minimum wage $\endgroup$ – john mangual Apr 18 '16 at 16:53
  • $\begingroup$ That doesn't matter. There's no reason to assume the relationship is not symmetric. $\endgroup$ – FooBar Apr 18 '16 at 19:36
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    $\begingroup$ @FooBar You are right the theory of minimum wage is quite clear, but there definitely is asymmetry here. I don't know why policy moved in one direction for NY and CA and in another direction for PR. All of these are within the United States. $\endgroup$ – john mangual Apr 18 '16 at 19:55
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Typically, what happens when a minimum wage is relaxed is that a plethora of jobs that were illegal under the previous doctrine become available on the market for workers.

The common metaphor used by its supporters for describing the minimum wage is that a minimum wage is a "price floor" under which wages are not permitted to fall, ostensibly to protect workers.

The accurate metaphor for describing the minimum wage is a price hurdle which each person's productivity must clear in order to sell your product (i.e. your labor) If your productivity is not valued by a buyer at a higher rate than the strictures placed upon it by legislation, it is illegal for you to have that job.

All other things held equal, reducing the minimum wage will create options for suppliers of cheap labor to actually have their product clear the market rather than having it denied by the State.

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  • $\begingroup$ can you explain how not having a minimum wage could be in workers best interest? $\endgroup$ – john mangual Apr 19 '16 at 12:42
  • $\begingroup$ @johnmangual ...easily $\endgroup$ – K. Alan Bates Apr 19 '16 at 14:01
  • $\begingroup$ what exactly is a supplier of cheap labor? is a child prostitute a good example? $\endgroup$ – john mangual Apr 19 '16 at 14:15
  • $\begingroup$ @johnmangual no. That would be a crime. $\endgroup$ – K. Alan Bates Apr 19 '16 at 14:16
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    $\begingroup$ @johnmangual in "developing" economic structures, sweat shops are a step in evolutionary economic progress. The only reason workers are willing to accept sweatshop conditions is that those conditions are better than their second best alternatives. In Western economic development, droves of workers emigrated to urban centers for those so-called "sweatshops" because they provided better opportunities than the agrarian alternatives. $\endgroup$ – K. Alan Bates Apr 19 '16 at 14:19

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