Minimum wage

Local resident provides his thoughts on proposed changes to the wage structure

If raising the minimum wage does no general economic harm because it increases spending and thus stimulates the economy, why not raise it to $20 instead of just $15?

The truth is, this fallacy has been disproven in many studies, around the world – Godin, Keith, & Veldhuis (2009);  Neumark & Wascher (2008);  Domberger Simon, Hall, Au Lik Li (1995) to mention just a few.

Those who suffer the most as the minimum wage increases are young, inexperienced workers between the ages of 15 and 24 whose employment decreased by 3 per cent to 6 per cent generally, and by as much as 4.5 per cent to 20 per cent in some cases (Godin & Veldhuis, 2009).

Increased minimum wage increases the cost of providing a good or service which must be compensated either by increasing the cost of that good or service;  or by increased productivity of the worker by reducing the number of workers so the same amount of work must be done by fewer people; or by forced bankruptcy for those businesses on the edge, either temporarily or permanently.

New, inexperienced employee prospects must be trained to be profitably productive. If a business cannot achieve that end in an effective period of time, such employees will not be hired, innumerable studies have demonstrated.

One of the consequences are that older persons trying to retire, but prevented by governments’ zero interest rate policies, are now displacing younger employees because of the seniors’  increased needs, and so willingness and ability to work profitably for the employer.

Efforts to promote and implement living wage policies are ultimately doomed to general failure:  “Living wages are not the answer to the hardships experienced by many poor families. Rather than reduce poverty, living wage laws rob low-skilled workers of the opportunity to participate in the labour market.  As a result, living wage laws hurt the very people they are intended to help, especially when the economy slows and many of them are trying to find employment.” (Veldhuis & Karabegovic 2010).

For example, a young person living at home does not need a living wage as much as training in a real world, work environment.

Rigid minimum wage laws do not permit this logical process to occur.

C. Wills


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