If I remember correctly Australian Government submissions to the national minimum wage review are drafted by the Department of Employment, etc but get cleared by central agencies, including the Treasury, so there is no excuse for an economically illiterate statement like this one getting through in the latest submission made on Friday (p. 32):
Although there is extensive literature on the impact of increases in minimum wages on employment, there is no consensus either on the magnitude or the direction of the impact.
While it’s difficult to identity large impacts on employment from minimum wages, so I agree there is no consensus on the magnitude of the impact, very few economists would doubt the direction of the impact is negative, as it’s a pretty straightforward prediction of the supply and demand model taught in economics 101.
Sure there is the famous Card and Krueger study from the 1990s that cast doubt on the impact of minimum wages on employment, but that study is highly controversial and its results are probably specific to the low-income New Jersey community on which the study was based. For a review of recent evidence on the minimum wage, see the paper by Neumark and Wascher, who in my view correctly summarise the prevailing view of the economics profession on the minimum wage:
Our review indicates that there is a wide range of existing estimates and, accordingly, a lack of consensus about the overall effects on low-wage employment of an increase in the minimum wage. However, the oft-stated assertion that recent research fails to support the traditional view that the minimum wage reduces the employment of low-wage workers is clearly incorrect.
So the Government is correct there is no consensus about the magnitude of the impact of the minimum wage on employment, but it is misleading to state there is no consensus on the direction of the impact.
I expect the issue of minimum wages will become very topical over the next year as retailers struggle to maintain profitability:
Queensland Economy Watch 