Found an interesting article this morning that forecasts back to school spending to be very weak this year. From the article:
“By Beemer’s reckoning, this has been the worst summer employment season for high school and college students in more than 30 years.”
What kind of jobs do high school and college students usually get for the summer? Minimum wage of course! So now that the minimum wage has been raised both in 2007 and again in 2008, what has happened? The answer: fewer minimum wage jobs. Surprised? You obviously aren’t familiar with the law of unintended consequences. Unintended consequences are outcomes that are not (or not limited to) what the actor intended in a particular situation. The unintended results may be foreseen or unforeseen, but they should be the logical or likely results of the action.
“Standard economic theory implies that minimum wage laws increase unemployment among low wage workers (the workers whose wages the minimum wage law will affect). A survey of American Economic Association economists found that 73.5% either fully or partially agreed with the statement “a minimum wage increases unemployment among young and unskilled workers”.”
Fuller, Dan and Doris Geide-Stevenson (2003): Consensus Among Economists: Revisited, in: Journal of Economic Review, Vol. 34, No. 4, Seite 369-387



