Raising the Minimum Wage Weeds Out Poor Working Conditions: An IMF Study Looking at China （含中文版）

Photo: Adjusting the minimum wage upward. Credit: Fufang Network.

（本文中文版在下面）

A friend of mine (and IMF economist) shared a 2014 IMF study with me on the effects of raising the minimum wage in developing countries, using China as a case study. The study, called "Does Raising the Minimum Wage Hurt Employment? Evidence from China", delivers the following upshots: (1) "a 10% increase in the minimum wage lowers employment by 1%" and (2) "in low-wage firms, raising the minimum wage lowers employment but raises wages more than in high-wage firms."

My take on this data: the employment lost from a higher minimum wage probably includes contracted temp workers or short-term workers, which are not really steady employment and usually include a number of other harmful labor practices, such as a lack of labor contracts or mandated social benefits, underage or child labor, unpaid work and overtime wages, etc. In short, assuming effective enforcement, raising the minimum wage weeds out some exploitative conditions and leaves more stable, fair employment in its place.

提高最低工资会减少恶劣工作条件：国际货币基金组织的研究

我的朋友（也是国际货币基金组织的经济学家）跟我共享了一个国际货币基金组织的研究，是论提高最低工资标准的影响，以中国为例。该研究文章叫做“提高最低工资会损害就业吗？中国的情况”，核心结论有两个：（1）“最低工资提高10%会导致就业下降1%”；（2）“在低工资企业，最低工资提高导致的就业下降幅度和工资增加幅度都大于高工资企业。”

我对研究的信息如下：更高的最低工资所导致失业情况可能包括外包临时工或短期工，二者均不属于稳定就业，也通常涉及若干恶劣用工行为，例如缺少劳动合同或法定社会福利、使用未成年工或童工、无偿工作或不支付加班费等等。简言之，在有效执法的情况下，提高最低工资标准会减少剥削就业，并留下更稳定地更公平的就业。

What is the Chinese Dream?

Over the past three decades, every Chinese Communist Party chairman, upon his taking the reigns of power, has developed a grand guiding principle rolled up into a nifty rhetorical package. Not much unlike U.S. politicians' campaign slogans, in the 1990s, it was Jiang Zemin's "Three Represents" (三个代表), and in the 2000s, Hu Jintao's "Scientific Development" (科学发展观).

Soon after Xi Jinping became the top official in China, he developed a phrase that would become his political slogan: "The Chinese Dream" (中国梦). But amidst increasing amounts of both real and perceived inequality, some in China do not feel that they are enjoying the dream, especially migrant workers who built much of that dream with their bare hands.

Over at ChinaFile, Sharron Lovell and Tom Wang asked a few young Chinese people about their dreams. One of the most memorable quotes for me was from a young man who said:

"If there weren't any migrant workers, it would be impossible for China to develop this fast." ... "The place you live was built by migrant workers. What you're eating was grown by migrant workers. What you're wearing was produced by migrant workers."     

“如果没有农民的话，中国不可能发展这么快。”... “你住的地方农民工建的，你吃的农民工种的，你穿的农民工做。”

See the entire video below.

"Could you help me find a sweatshop for my friend?"

(Reuters)

On Monday, I attended the fifth annual Forecast of China's Economy at the New York Stock Exchange, an event organized by the National Committee on United States-China Relations which invites Chinese experts to discuss China's economic policy and its potential to influence the economy in the coming year.