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September 12, 2006


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What if it were the case that prices went up not when wages rose, but when the artificially low prices charged by the big box stores managed to create a near-monopoly? Then we'd have low wages and high prices. How are you so sure that wages and prices in this context aren't, at best, unrelated?


Why bother with a minimum wage at all? Why not try and set up a local Earned Income Tax Credit? New York City has its own EITC program in addition to the Federal program. Businesses will be encouraged to remain and will not be forced to cut jobs, while low income households will be provided with additional income. Seems like a more efficient redistributive policy than a minimum wage.


Big stores trigger thoughts of monopolies, but I think there is simply no reason to fear that link in this case. We have years of experience with Walmarts and Targets and the like, and their prices are really pretty low. It is the small stores with locational monopolies that have "high" prices. Besides, the big box retailers now face substantial competition from online sellers.

As for the Earned Income Credit, I agree that there are many ways to redistribute wealth, and that wage and price controls in one direction or the other are unlikely to be the best choice. We might also improve upon an earned income credit. But we must also deal with what is politically plausible at a given moment. I might add that New York is not known for its low retail prices, and low prices are an important component in improving the standard of living of low income populations.




Dr. Levmore you mentioned the anti-Walmart/ big box bias. Might this be a case of minimum wage being used to somewhat further that agenda? I would imagine that a minimum wage would appear much more attractive than would prohibitive taxes or zoning measures. It would also seem that in the long run some big box retailers would eventually either relocate, or at the very least not expand at the rate they would have otherwise.

amy mcClain

big box needs to pay people what they deserve. people work to hard and long to bring home a check big enough to pay one bill and bus fare. walmart make billions every other day. come off your high horses and share ur wealth with people.

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