Agenda - 05-21-1997 - 10b - Laserfiche WebLink

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►. APPENDIX 5. 51 ordinance provides a limited basis from which to assess the ordinance's impact. But it is clear that claims that a living wage law will drive investment from a city have found no basis of support in the actual experience of Baltimore. Table 3: Total Assessable Personal Property Tax Base for Businesses in Baltimore City From 1990-1995 Year Current $ Constant $ 1990 $695,303,010 $695,303,010 1991 $705,676,100 $684,457,905 1992 $701.417,280 $661,153,059 1993 $697,686,606 $640,373,204 1994 $712,617,470 $636,834,200 1995 $764,257,220 $666,344,552 The Economic Debate Over Minimum Wages The results here are consistent with a growing body of economic research that has challenged some long held notions of how labor markets function, and has influenced, most recently, the debate over raising the federal minimum wage. According to traditional economic theory,wages are determined by an equilibrium of supply and demand in the labor market. The demand for labor is derived from the productivity of workers "at the margin," — that is, how much an additional unit of labor would contribute to the firm's revenue. In this view, an attempt to raise wages beyond the market equih'brium rate will cause increased unemployment. This results from both employers cutting back on hiring at the higher wage, and from the incrmsed number of people who enter the labor force to seek work at the higher wage (but cannot find it). This analysis of the effect of the minimum wage has been a mainstay of undergraduate economics textbooks for decades. However, in recent years a number of empirical studies have cast considerable doubt on the conclusion that raising the minimum wage will necessarily increase unemployment. Most prominent among these is the study by Princeton economists David Card and Alan 12