Janet Yellen Quotes
Firms don't just try to pay as little as possible to get the needed bodies on board; when there is unemployment, they ask themselves how wage cuts would affect the behavior of the employees. Would they quit or feel dissatisfied and work less hard on the firm's behalf if they feel that wage policies are unfair?
Yellen, Janet L. Interview with The Washington Post, 2013.
This is the classic conservative argument against raising the minimum wage. Historically, if the minimum wage was raised well after there has been a period of wage inflation, there has been little or no negative effect on the lowest paid workers. However, when the minimum wage has been raised during a period of wage stability, there is an effect of making some workers simply not worth the rate that they must be paid. However, even then, after a year or two, the negative effect begins to dissipate.
Janet Louise Yellen is an American economist, civil servant and policymaker serving as the United States secretary of the treasury since January 26, 2021. A member of the Democratic Party, she previously served as the 15th chair of the Federal Reserve from 2014 to 2018. She is the first woman to hold either role. She is also a professor emerita at Haas School of Business at the University of California, Berkeley, and formerly a distinguished fellow in residence at the Brookings Institution.