It seems there are endless crusades to increase Minimum wages but have these crusaders stopped to think of the negative effects of Minimum wage
Intentions vs effects
Without giving it much thought, minimum wage seems like an idea with only upsides. As much as 70 per cent of Americans support an increase of the minimum wage to 10 dollars per hour. The California minimum wage is set currently at 11 Dollars per hour there is a strong push for 15 dollar minimum wage. What would be the effects of that increase? Is an employer more or less likely to employ someone who is so unfortunate to only be able to generate 8 dollars an hour while the state mandates they must pay them 10?
People tend to buy more of something when its cheapest. To set the minimum wage above what the free market sets, means a business would hire fewer people at that new higher price. Meaning some of that labour will go unemployed even though willing to work for such wages while others are willing to pay. This creates a chronic surplus, fewer jobs available and more people applying because of the new higher wage.
Typically people starting entry-level jobs are either young, have no prior training or applicable education. These are the minimum wage earners. The chronic surplus makes the competition for such jobs fierce. Making them less likely to be employed. Cutting off the bottom rung of the ladder and never received on the job training and learning how to create value to an employer. Without prior work experience, you cannot hope of earning a decent living.
Countries without minimum wage laws almost always have lower rates of unemployment. Switzerland is one of the few modern countries without a minimum wage. It has a very low average unemployment rate at about 2 per cent. In 2003, “The Economist” magazine reported: “Switzerland’s unemployment neared a five-year high of 3.9 per cent in February 2013 “
Raising the minimum wage lifts people out of poverty?
Walter E Williams; “This argument doesn’t even past the smell test” if that were true you could go to a poor developing country with a high level of poverty and simply raise the minimum wage. Sit back and wait for people to prosper. For obvious reasons, this can’t happen.
A sinister effect of minimum wage
In a book called South Africa’s war on capitalism, author Walter E Williams provides citation after citation of racist white labour unions being major supporters of minimum wage laws for blacks yet the union would never have a black as a member. The stated reason to price out the black workers with a new higher wage. Leaving only white likely to be employable at that price.
The chronic surplus minimum wage laws create, give racist employers a method of discrimination that the free market would not allow. If a job has 200 equally qualified applicants 100 of which are black then the employer can refuse to hire all 100 blacks. For he still has 100 more qualified applicants to call on. If there is no minimum wage and no chronic surplus then every time the employer turns away a black applicant they need to have someone who is not black and qualified that They can hire. The employer may not be able to find that person, at that price. The racist employer would have to wear the cost of discriminating or not fill the business and customers needs. This is one of the worst Minimum wage negative effects.
Politicians and groups who advocate for raising the minimum wage use very emotionally charged language. They protest and chant X dollars an hour isn’t a living wage (support a family), whoever said it was meant to be in the first place. If you follow that logic then anyone who gets a job no matter how unskilled or new to the job market this person is they ought to make enough to raise a family and conversely an employer better pay it. Likely this person will go unhired or an employer will work out a way for that need to be filled by technology or forget it altogether. keeping in mind that people give their labour for free in internships to gain experience or in hopes of future employment within that company. It doesn’t matter your intentions when writing, lobbying or protesting for a new minimum wage law, only what emerges after said law comes into effect.