You're watching...
MIT Sloan School of Management Professor Paul Osterman on why the minimum wage should be raised.
Also in this playlist...
Auto-advance: ON
Auto-advance
This transcript is automatically generated
Well New York is one of the latest states to call for an increase in minimum wage many small businesses complain though.
That it increases the cost of hiring and therefore will prevent them from hiring more people.
That's not good in this environment but MIT professor -- -- -- says it will ultimately be a boon for the academy joins me now.
To debate this topic once again professor let's try to make headway here now.
It it just goes along with -- does it not that when you raise the cost of hiring workers you will get less of them.
Well actually debt laden let me just say that this is a great day to be talking about this this today June 4 is -- 100 anniversary of the first minimum wage in this country -- -- Massachusetts.
A hundred years ago.
And and beyond you know there's that whatever celebrations we may or may not want to -- the point is that that's a policy it has been with us for a hundred years.
There's widespread support we've gradually increased it.
And in the last decade and a half we let it stagnated.
In New York it's a minimum wage was today at 1970 dollars it would be ten dollars and seventy cents an hour.
The the proposal I think is to raise it to 850 an hour right south sentence Larry I always -- about a 20% rise.
That's right eighteen states including Arizona Florida low wage states have minimum wage is higher than the New York State wage at this point.
Right but there's there is you -- you say it's it's widely accepted there are a lot of people who don't accept the fact.
That if you raise the price of hiring a worker -- will actually get more -- lot of people who say that that goes would not only gets logic but against.
The direct business experience of particularly small business owners particularly hiring the entry level workers and that's why they say the folks who can least.
Afford this particularly those who work teenaged years and unemployed -- those were a minority and unemployed they're gonna be hit.
-- -- Well well under half of minimum wage workers are teenagers in fact there are two day.
About eleven million adults who are working full time who -- below the poverty line so this is not an issue about teenagers.
This is about raising standards for adult workers who -- working hard.
And -- in poverty.
Well but again that the teenage unemployment in New York it's -- higher elsewhere but it's 25 point 9%.
In New York that is a huge number that you don't want to make any bigger.
By discouraging employers from hiring young people.
I absolutely but -- I mean huge unemployment has always been high he can't contributed to -- minimum why it's really.
Palestinians don't have -- -- there was a great study by Walter Williams that that did it there was a number of other studies that have related its specific story to to the minimum wage.
-- absolutely so let's look at the research so last year an article came out in the Harvard.
Lead sponsor of the Harvard University sponsored review of economics and statistics from the top four economics journals in the country.
It showed that minimum wage increases within the range we're talking about do not reduce employment.
Now there are lots of studies that are on the opposite side -- actually write the date they tend not to be published in -- reviewed journals.
They tend to be published by conservative think tanks they tend to be sponsored.
By organization yes.
-- on the other hand there are some very distinguished Nobel Prize winning economist Milton Friedman and Friedrich Von -- -- James Buchanan all of -- think the minimum wage.
Today at to have it at all is a mistake because it does discourage people from.
Ireland now -- you're right I mean to be fair there is an argument on the other side what what I'm what I'm trying to say though is that recent research.
Does seem to be on balance showing that modest increases in minimum wage -- the kind we're talking about.
Do not reduce employment and the reason is because turnover falls people work harder because firms find ways to operate more efficiently.
An organization we know about including I'm sure fox Fox News.
Could operate more efficiently.
Saying well -- and -- reaganomics and aren't maybe maybe if unemployment was down to 5% I can understand that but boy in this environment you don't wanna make unemployment any worse and anything that risks that.
Is a gamble -- got to leave it at that professor Paul -- -- from MIT great to see again professor thanks very much thank you thank you very much this year.
