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Neoclassical Economics and Federal Policies

Author

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  • Brigitte H. Bechtold

    (Sociology, Central Michigan University, Mt. Pleasant, MI, USA)

Abstract

In the United States, commentators and politicians demonstrate a deep-rooted persistent adherence to a neoclassical model of the labor market, where a minimum wage increase is seen as an inevitable cause of unemployment, as it is assumed to occur at a point where the labor market was initially in equilibrium. The work of the Minimum Wage Study Commission (1981) uncovered the small size of the unemployment inflation effect, and the new minimum wage research also has corroborated this. Seen against these findings, the persistent rhetoric of sizeable “unemployment effects†of minimum wage increases simply shows the power of employers in a capitalist system. This paper suggests that counteracting the rhetoric is best done by recognizing the agency of the minimum wage worker and portraying this worker not as one who may “suffer unemployment†under a wage increase but who chooses to work fewer hours if hourly wages and benefits become sufficient.

Suggested Citation

  • Brigitte H. Bechtold, 2014. "Neoclassical Economics and Federal Policies," Review of Radical Political Economics, Union for Radical Political Economics, vol. 46(4), pages 496-501, December.
    • Handle: RePEc:sae:reorpe:v:46:y:2014:i:4:p:496-501
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    More about this item

    Keywords

    minimum wage; neoclassical model; unemployment; morality;
    All these keywords.

    JEL classification:

    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J59 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Other

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