Why Minimum Wage Laws Should Be killed – Part 2

Hi. Really great points from everyone. I've been studying employment issues for a few years now (and also worked low-paid and high-paid jobs in my life). I'm torn about minimum wage's usefulness. It's true, most people on minimum wage are not in desperate financial straits ... but what about those who are? I think it's foolish to repeal the minimum wage without a replacement strategy that can ensure vulnerable workers don't get skewered.

The points about people being paid "what they're worth" (according to the market) also speaks to another interesting issue, which is the social problems inherent in relying on the market to set things like income. Instead of saying, "let the market decide, and if wages drop such that some people need to have 3 jobs for 5 years tough for them" and "3 low-paid, part-time, no-benefits jobs are better than nothing" another solution is to beef up the social safety net with paid training (in-school and on-the-job) so people, and thus society, can handle market vagaries. A number of European countries have implemented this "flexicurity" model, with great success. By success I mean high country economic competitiveness and low unemployment.
http://www.euractiv.com/en/socialeurope/flexibilit...

As to Alberta having low minimum wage but high actual wages, I think this is very, very likely due to the explosion in jobs (especially traditionally low-income ones like the service industry) from the oil boom. Because of the unusually (and, because resource-based, probably unsustainably) strong labour market there, I'd say it's anomalous and not a good example.

Adrienne

As a small family business owner, I've always been paid by salary, far under minimum if you count the hours.
Worse than just a minimum wage increase, the majority party in my state is trying to add a 15% payroll tax (including part time) to try and take over all health insurance in the state. I see a mass exodus out of the state by any business that uses a lot of part time help.

I recently watched show on the ship scrapyards in India. Seeing the extreme poverty really made me value the way I live.

I think you are quite correct on this issue but I think the same cannot be said when it comes to the less developed nations.

Over here (pls insert your country here if you dont live the US/Canada and major part of Europe) there is no such thing as minimum wage or unemployment benefits.

:lol: So for those with little or no education are way down on the totem pole and being paid, some as low as US$1 per day to make shoes for people livig in the developed countries.

Perhaps not minimum wage but fair wage is the correct way to go.

VERY interesting points all though i do not fully agree

Hi John,

Excellent post! You have a great understanding of basic economics. Minimize wage laws disenfranchise low skilled workers, which disproportionately hurts minorities.

Think about it if the minimum wage is $15 like it is in Boston where I live, and you're a low skilled worker who's labor is only worth $10/hr, then you're out of luck. This person have little change of getting a job where he can gain much needed job experience to qualify for that $15/hr job.

Increases in the minimum wage force companies to hire less people or worst fire people because of increase labor costs. It happens all the time.

Only a tiny fraction of people the US really benefit from increased minimum wage (since very few people actually live off of minimum wage), not to say all the people that are left without a job.

If you really want to screw the poor increase the minimum wage to $30/hr (at least that is Boston to have a LIVING wage) and see what happens.

Several countries/cities around the world have no minimum wage laws, including: Switerland, Hong Kong, Denmark, etc. It's not surprising these countries have very low unemployment.

Every minimum wage employer I've seen has advancement opportunities. If you can spell your name and tie your shoes you can become a assistant manager at a fast food restaurant, and they make around $8-$12 US.

So it's not like you're stuck at minimum wage forever, unless you're completely worthless and don't get raises when review time comes around.

I definitely agree with you John. Most people who are working minimum wage workers are living with their parents or rooming with friends. Of course, you do have the 30 year olds with children who need the extra money, but most are married and most of the time at least one has a decent paying job.

Another great article :mrgreen:

I think there should be a limit to minimum wage increases, but the "doom and gloom" scenarios haven't played out in more liberal areas of the U.S.

I think Google should pay AdSense publishers minimum wages...

Wow! It looks like my original e-mail to John Chow on my Minimum Wage Challenge really struck a chord with readers - and brought in even more traffic!

You gotta love the irony.

In any event, the dialogue here has me thinking... is the challenge even worth going through?

My only goal was to raise awareness about the new law and pay hike. In that regard: success.

I look forward to continued conversation and your feedback!

http://www.jobacle.com/blog/minimum-wage-challenge...

Sorry John but I think you missed the point. Unless I see statistics of who is working minimum wage in what cities I just don't believe it. I used to work minimum wage and most of my co-workers were middle aged adults. Your article seems more opinionated rather than fact driven. And you can't really know what it's like living on minimum wage unless you do so. Growing up with parents as a cushion doesn't really let you know what it feels like to be poor.

I totally agree with this. No one can live on minimum wage. Even the place I work at doesn't use minimum wage to be fair to the workers.

Some people will only learn when their job is pulled out from under them and they have to resort to the only jobs available. I wanna see what some of these same people think when they hit 35+ and the company they work for or own goes belly up. When then they are put in the same situation as many people are now days. Ambition has nothing to do with it. It's survival and taking care of the family that will make you look at it differently...regardless of what Economics 101 taught you!

When wealth and the bottom line becomes more important than humanity, then there is definitely something wrong with our society and the people that control it!

There defintiely needs to be a little more public education about the minimum wage. Most people act like its a huge issue, but they don't understand the repercussions of it.

Minimum wage is really an illusion, life what you make of it, period.

What I'd like to know is, just who exactly says that most folks who make minimum wage aren't poor? Because I sure as hell was poor when I made minimum wage, and I wasn't a teenager living at home either. I was a reasonably educated adult in a town that had no use for educated people, and suffering from post-traumatic stress because of a domestic abuse situation that I'd escaped (and it was a family member, not a spouse, not someone I had a choice about being acquainted with).

I really think that before you can make any sort of informed statement about minimum wage, you have to try living on it. REALLY living on it. No car, accepting handouts from family, because if you didn't you wouldn't eat every day. Freezing in a basement suite underneath people that don't turn the heat on unless it's below 35 outside (which happens in Alberta occasionally) because they're also poor and trying to save money. All of this because you were temporarily unfortunate, and in my case born into the wrong family.

Yes I made it out, under my own power, and I did it through sheer determination, and no, a couple extra dollars a month wouldn't have fixed everything. What it would have done is given me a tiny bit of much needed breathing space. After 2 years at the job I'd gotten one single 50 cent raise, because they weren't required to pay me more than that. And my boss had to really, really push the owners to get me that raise too. I couldn't leave, because there really wasn't anything else in that small town that would have paid me any more.

You're dreaming if you think that employers will pay decent wages in order to make it easier to find employees willing to work for them, without being legally required to do so. If they can pay less they will, because there's always someone desperate enough to work 2 or 3 jobs for low wages, and for more reasons than I think you can possibly think of, because all your limited imaginations can come up with is "there must be something wrong with you".

I'm appalled at the ignorance I'm seeing here. I used to think Vancouver was a nice place to live where one was less likely to be judged (than Alberta where I grew up), but it looks like it's acutally a place where they only accept you if you're rich. If you're not, then you're defective somehow.

Shame on you all. You're emblematic of all the things that have changed for the worse in this Province. You make the rednecks in Alberta that I grew up with look enlightened and compassionate and liberal by comparison. Not a single one of you has been at the mercy of the system, and I pray you never will be, because it's truly miserable.

News Flash: Having money does not make you awesome. Therefore, not having money does not make you not-awesome. Get over it.

Another great post, John. Beyond the simple political pandering and bad economics on which the MW is based, there are ripple effects of driving the MW up. Some regulations and laws are based on multiples of the MW, so the negative effects are felt by businesses at various levels, not just near the bottom wages.

-bill / bweaver.net

It has shown that in states where the state took initiative to raise minimum wage over the federal minimum wage that their economies have gotten stronger.

I support paying a minimum wage.. i came from a poor family, and even worse, both my parents were uneducated..

the misery of going through life then, is something that you would not know..

paying a minimum wage will defiantely help the poor , and will guarantee protection for wage earners..

yours truly,
http://whygossip.blogspot.com

p/s- i am still studying, and internet is my only source of income.. but i belive the goings will get better one day

I do think John is right, having come from a poorer family myself and utilizing things that are made available to better myself like low interest federally subsidized student loans, local state grants, etc. Um hello, get that education, work part time at an easy job like McD's or telemarketing or something and go to college. The minimum wage does have it's affect on the poorer people in this nation, the ones that didn't get an education, finish high school or for whatever reason are waitresses and cashiers at 53.

That's not the majority of minimum wage earners. They are indeed teenagers and young adults. This country offers more than enough assistance to all of its' poorer citizens in order to better themselves, you DO have to work for it, but that's the American Way. Your success in life really is up to you and you alone.

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In some ways my work experience is like Johns except that I stuck in longer than four hours!

My first job was going door-to-door and hanging flyers for Dominoes Pizza. My second job was picking up golf balls on a driving range. Both of those were minimum wage jobs.

In High School I worked at a discount store and was told I could jump up to management as soon as I graduated, I chose not too. Instead I went to work for a big print shop in South Boston. I stayed there for a year and then joined the army. After leaving the army I took a job with a telco, where I still am today.

My skills and experience got me my current job and it pays far more than minimum wage. No one handed me this job, I earned it.

I said it before and I'll say it again:

"Minimum wage has never been intended to be a living wage."

Stop confusing the two! If you are older than 25 and working at minimum wage than there is something wrong with YOU!

Why are you still working a shit job? Those jobs are for teenagers not heads of households. You must lack the ambition and the drive to succeed in life.

Money doesn't make you rich. Money has the power to make you rich and poor if you mis manage it.

Http://csgonsilou.blogspot.com

:evil: Yeah. What you earn is not as important as what you do with the money. Some people earn big salary but still not enough. Why? they don't know how to manage their money. What you do with the money is more important. You you waste them it your fault. :evil:

In my opinion, if you raise the minimum wage, all other products will go up in price making it hard for everyone to buy those products. Why? Increase in minimum wage is increase in cost of production. Therefore, since most companies are here to make money (profit), they raise their prices.

As a result, everyone stays poor as always.

Hmmm... I was living on minimum wage or just slightly above it until after I was out of college.

And Noooo... I was not living with the folks. I needed to work two jobs to pay the rent while going to school full time.

Sometimes I would go three days without sleeping. I remember hallucinating from time to time because I went so long without sleep. (I thought the wall was falling on me or I would reach for something that wasn't there or I would see things like patterns moving on the wall, etc)

Time was sooo short... I usually only had short periods of time, like an hour or two between school and the jobs. I could sometimes only do one of three things with my free hour... I could either eat, sleep or bathe. (Sometimes I went several days without bathing - Yikes!)

On Fridays, I would work a tipple shift so I could have the next day off. I would work after school until 9:00 at night, go to my other job and work from 10:00 at night until 8:00 in the morning and then back to the other job at 8:30 until 5:00. (If you include school, it was 28 Hours)

I did that for about three years. Looking back, I have no idea how I was able to maintain that kind of work schedule for so long.

John, this is a perfect example of the government doing something that actually has no positive impact on the very thing they claim to 'do something' about. It happens all the time.

I'm really glad you chose to focus on this topic once again!

John you are right on the money as usual. Marc and Ian are clueless on the real effects of minimum wage laws. The $1 menu at McDonald's will be the $1.50 menu then the $2 menu in no time.

I once applied for a job at a radio station here in Oklahoma. I told them I would work for free. (Yes I said free!) I wanted to get experience in the radio industry. They told me they could not hire me and pay me nothing because of minimum wage laws and they could not afford to hire me at their company at that time. I was told by the program director he would hire me in a heartbeat (as I was the only person that had ever asked to be paid nothing.)

Minimum wage laws kept me from getting a job that I would have gladly done for free. I'm still hoping to get hired on when a paid position opens up, but I could have been working in the radio industry and had a year of experience under my belt by now if not for government interference. :?:

John, you make one mass generalisation, I think you are way off the mark. You should watch a documentary called "The American Ruling Class"
Just cause you dont see the poverty and hardship, doesnt mean it doesnt exist.
http://www.youtube.com/watch?v=gDgFiW2xtf0&eur...
It may not be apparent in Canada or Australia for that matter, but whilst there is a lot of wealth in America, there are a lot of people doing it really tough. A minimum wage goes some small way from preventing them from being ruthlessly exploited.

To those who think John is wrong.

John's understanding of economics, money and the marketplace is the KEY to why is he so successful.

He has just demonstrated a wonderful understanding of marketplace economics.

If you disagree with him chances are you would disagree with him on most other economics issues as well.

John's approach to money is why he is successful today. I would advise you be careful not to dismiss his mindset so flippantly.