Want to Decrease Unemployment? Abolish the Minimum Wage

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minimum wage janitorial staff
Low paid cleaning help
minimum wage janitorial staff
Low paid cleaning help

A lot of the backers of the minimum wage would like to believe that the minimum wage is a net positive for the economy. They say that a minimum wage enables workers to achieve a certain minimum standard of living. While this is true, it is an artificial figure. That standard of living is a creature of political expediency and political maneuvering. In other words, whoever can get the most votes and whoever can make the most noise gets to set the wage floor.

It is not based on economics. It is not based on any economic reality. It is based on political expediency. This is the problem with the minimum wage. It is a political creation with outsized negative economic implications.

There is a reason why a huge number of people are unemployed. It is not because they are not looking for work. It is because nobody would hire them. Why? Employers won’t take a risk on them. They don’t have the skills.

These individuals, and there are millions of them, are stuck in a chicken-or-egg dilemma. They can’t get a job because they don’t have skills. They can’t get skills because nobody would hire them. I hope you see how ridiculous that chicken-or-egg dilemma is.

The problem is the minimum wage. When the law states that I cannot pay you below a certain level, I have to do an economic calculation. I have to be sure that the amount of money I spent on you can be recovered, based on the value of the work you produce. This is a serious problem when you don’t have any skills. Obviously, the value of your work would be worth less than that of a person with some skills. I hope this much is clear.

Not surprisingly, the minimum wage is then geared to benefit people who already have skills. People with criminal records, people with disabilities, people who are in and out of the labor pool, or people who are looking for flexible work are simply frozen out. In large part, this is due to the minimum wage.

The minimum wage enables employers to take risks on people with low productivity or people with unknown productivity. Once an employer sees that you are actually a productive worker, that person is economically incentivized to pay you more. Why? You can easily walk away with your skills and experience, and go to somebody else who would pay you what you are worth. This is one aspect of real world economics that backers of the minimum wage either refuse to acknowledge or are completely blind about.

If you want to boost employment and increase economic participation, as well as boost the overall economy, you can do well with removing the minimum wage. Would there be riots? Absolutely not. Just look at Hongkong, Singapore, and China. These countries haven’t had minimum wage laws for a very long time. In fact, their low wages help them to build robust economies.

1 COMMENT

  1. What a load of tosh. It has been shown numerous times that the US states with the HIGHEST minimum wage also have the most dynamic economies – or do you not read American papers? In the same articles they point out that those states with the LOWEST minimum wage have the most stagnant economies.

    Plus both the British and American Chambers of Commerce have come out publicly in the last few years, to say a HIGHER minimum wage would benefit their economies more than reducing it.

    Guess what, if people have a guaranteed amount of money for their work, then they are willing to spend more. If they are willing to spend more then more people will be employed because more product needs to be delivered. As more product is delivered profits rise and more people can be employed.

    To say criminals or unskilled people are missed out by the minimum wage is to ignore the fact that most people who work for minimum wage are UNSKILLED. Criminals miss out on jobs because of prejudice and an outdated sense of revenge – or whatever word you would rather use to politely describe it.

    Plus your argument about being paid more once you prove you can do a job is blinkered and ridiculously stupid. Bosses only have one interest – the profit line. If you can do the job for $7 an hour then why pay you more once you’ve proved that? The boss can always hire another unskilled fool for $7 an hour and spend 10 minutes teaching them your job once you go to someone paying oohh, $7.10 and hour – a whopping $340 per 48 hour week before taxes!! You seem to have completely forgotten that the whole purpose of the minimum wage was to guarantee the pay levels of UNSKILLED workers.,

    In the industries that pay minimum wage, the skills you have are not something to write home about – waiting tables and delivering pizza company fliers being just two of them. But both of these jobs are now being done part time by people who can only find part time work (because that is the only kind of work available to the unskilled), meaning they have to do two, three or even four jobs A DAY to manage to earn enough to have any kind of standard of living – let along feed their families.

    If you want to write trolling articles to get clicks and people annoyed then you are doing the right thing. If that isn’t the case, then you are the worst kind of apologist for Republican/Tory profiteering.

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