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Why Minimum Wage Laws Should Be killed

written by John Chow on July 24, 2007

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I received this email yesterday from Jobacle.com asking me to take part in the minimum wage challenge. The challenge ask all bloggers to live on minimum wage for one week.

You will need to learn how to stretch a dollar because every other expense will go towards your budget. Think you can stay nourished and entertained while maintaining the quality of your life? Prove it. Take the challenge.

Unfortunately, Jobacle.com gave everyone too much of an out for the challenge to really work.

We don’t want to make this overly complicated. So if you decide to participate you can still live in your house and pay your mortgage. You can still get behind the wheel of your SUV. And yes, if there’s a medical emergency, you can still take care of it. Even keep your high-speed Internet connection.

If I were to remove the cost of housing, internet and transportation, then the only thing I really need to pay for is food. While I wouldn’t be able to eat very well on minimum wage, I’m pretty sure I wouldn’t have to live on mac and cheese either.

The challenge is to highlight the new Fair Minimum Wage Act which came into effect today in the U.S. The new minimum wage is $5.85 per hour and will increase to $6.55 per hour next year and $7.25 the year after that. Jobacle.com feels the new wage level is a joke and disrespectful to employees.

I believe the minimum wage laws should be killed off and wages should be subjected to the laws of supply and demand. I’m sure my position isn’t very popular but I think politicians will eventually have to recognize that minimum wage laws just doesn’t do what it was intended to do.

Minimum Wage Law Hurts The People It Was Designed To Protect

Jobs are subject to the laws of supply and demand just like any other commodity, with or without a minimum wage law. If something is price low, you sell more. When you price it high, you sell less. When wages gets too high, companies hire less. The means more unemployment. Canada’s (British Columbia) minimum wage is $8.00 an hour (and our dollar is almost on par with the U.S. now). Canada has higher unemployment than the U.S. I wonder why?

The whole point of a minimum wage law is that the market wage for some workers is deemed to be too low. If it is fixed by law above the market level, it must be at a point where the supply exceeds the demand. Economists have a technical term for that gap. It’s called unemployment. Advocates of minimum wages either reject that elementary logic or don’t care.

A minimum wage law denies workers the freedom and right to negotiate their own wage contracts. It forces employers to lay off workers whose work is no longer worth the minimum wage and reconsider future hiring plans.

Minimum Wage Laws Are Unfair To Workers

What is a fair wage? My answer would be whatever the employee and the employer negotiates. Certainly it is not fair to be forced by the government to be unemployed at $5.85 per hour. Minimum wage laws forces workers to remain unemployed rather than accept work at a lower wage. It forces the unemployed to accept the indignity of welfare rather than the indignity of a job. It kills job opportunities for youth, women, visible minorities, unskilled workers and denies young workers the chance of getting on-the-job-training and work experience.

It’s Self Defeating Model

Raising the minimum wage may make it look like it’s giving more money to workers but it’s really a self defeating model. Assuming the business doesn’t lay off any workers, it’s operating cost just went up. What does a business do when their operating expenses increase? They raise prices to make up the difference. That adds to inflation. Suddenly, everything cost more and that wage increase buys about the same amount of stuff it did before.

We Are In A Global Economy

An increase in the minimum wage is always followed by an increase in off shoring jobs. Does the US have any tech support call centers left? When you operate in a global economy, having minimum wage laws just means businesses can go somewhere else to find labor. It’s not just big businesses that are off shoring jobs to districts with no minimum wage laws. You’ll be amazed at how many mom and pop operations are sending work offshore.

You Are Where You Want To Be

I grew up in the poorest neighborhood in Canada. My parents came to Canada with nothing but my dad always told me that in this country, I have no limits on what I can achieve – that if I didn’t like my situation, I have the power to change it. I am where I am today because I was stupid enough to believe that.

We live in a capitalist country, not a communist one. It’s not the government’s job to take care of you or your family but many people seem to believe that. You don’t like living on minimum wage? You can’t live on what you’re making right now? Then do something about it! I would argue that everyone of us is where we want to be right now. Because if we’re not where we want to be, we would do something about it. I don’t know about you, but I rather be in control of my own destiny than let the government be in control of it.

For more information on the true effects of minimum wage laws, read the Fraser Institute report The Economics of Minimum Wage Laws.

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{ 130 comments }

Nabloid.com July 24, 2007 at 10:27 pm

Minimum wage laws are useless… but then again in my province no one uses them except maybe 15 year olds in retail…

I still hate min. wage laws because in economics, it just doesn’t make sense…

CASH for COMMENTS July 25, 2007 at 1:37 am

@ Assuming the business doesn’t lay off any workers, it’s operating cost just went up

So true. Layoffs the biggest problem. That’s why good help is hard to find. Workers will quit on you at a moments notice. But hey John Chow I wrote a Thank you Letter for you. Keep up the good work.

http://www.cashforcomments.com/thank-you-john-chow/

a video a day July 25, 2007 at 7:13 am

minimum wage has prevented a lot of people being exploited in the uk, so i don’t see it as a bad thing

J July 25, 2007 at 10:14 am

What is this exploited stuff? If people are willing to work for less, if they are ok with working for that much, how is it exploiting? How is the government saying you must pay at least $X automatically making it not exploitation? They are not being forced to work there. The government bumping up the pay rate, an artificial increase, does, as John says, nothing. Everything just costs more afterwards, which cancels out the artificial increase. Nobody getting the pay increase produces any more, works any harder, or does anything that would be worth an actual pay raise. “Pay me more for doing the same.” Great incentive to get ahead, right?

Minimum wage was not designed to be a living wage.

Jeff Kee July 25, 2007 at 10:57 am

There were days back in Britain where the working class created a massive under-treated group and were being exploited under the laisez-faire economics. At that point the gap of wealth and poor skyrocketed, and the workers lived in bad conditions.

That’s when unions and what not popped up, to fight for their own wages. Personally I consider that just as much as part of the “Supply and Demand” market – it’s a form of negotiation through collective means.

Does exploitation still happen? Depends on what you call exploitation, but I don’t think so – at least not in Canada/US.

As much as I agree with the notion that the minimum wage gets in the way, when somebody tries to deny the fact that it helped out in Britain, they are in need of history education.

Marc July 25, 2007 at 12:43 pm

What also should be noted is all the violence and lives lost to achieve decent wages and standards to create a middle class. We’re headed back towards that huge divide in the developed world. Free markets are not as beneficial as many make them out to be. What is the natural state of the free market when it comes to government? War! That’s why we prefer monopoly and no market competition when it comes to government.

Mat July 27, 2007 at 9:10 pm

Jeff I have been arguing that to my pure liberal buddies – unions form part of a supply and demand free market. They don’t like this.

Over The Web July 25, 2007 at 3:21 am

I’m with your words.

Marc July 25, 2007 at 11:43 am

I’m sorry, but you don’t know what the hell you are talking about. You depend on government to set the environmental conditions of any market. That includes providing business a stable market and legal framework to operate. It also includes protecting workers from exploitation. Protecting the population from poison in food that they have no way of discovering on their own. Many of these safety mechanisms are no longer functioning correctly in the the developed world for the sake of growing global GDP growth, not local GDP growth. Multinational corporations run the world right now and they are interested in the whole pie. That means individual interests are sidelined. It is also the original definition of Fascism.

I know you have been convinced of your ideas with incomplete logic and economic sound bites, but you need to widen your frame and make a further in-depth study of the issue without endorsing dangerous ideas. I can’t address all the points here because it would take far too long so I’ll just reiterate.

You don’t know what the hell you are talking about. I’m a capitalist by the way, but not a fascist. Educate yourselves people.

Marc July 25, 2007 at 12:16 pm

By the way, tech support jobs were never minimum wage jobs in the U.S. Working in McDonald’d is though. The McDonald’s job just can’t be exported… yet. So your example holds no water.

I’ll spare you on technical points since you’re not an economist except for one. Raising prices to cover employee costs does not result in inflation it results in higher prices. Inflation is determined by growth in the money supply. Yes, it’s a technical term and often lost on the layman with disasterous implication s of understanding.

John, you are a successful businessman and done well to maximize the opportunities you’ve been given, but I know from reading this blog that you do not have a full appreciation of your own success on an economic level. Few businessmen do. Success in business has no bearing on understanding economics. Part of the developed worlds problems is that we have been relying on businessmen for economic advice. That’s why we live in a society where business holds more and more monetary and political power. Individuals have less and less. Do you want to live in a highly stratified society or a flat one? Stratication of oppotunity. It’s the difference between living in Mexico and living in Sweden. Mexico has now produced the the world’s richest man, but I’d wager the average Swede has a much better lot than the average Mexican.

Marc July 25, 2007 at 5:29 pm

Therein lie the values of most Canadians. While we’re not as socialist as the Swedes, they have a model that many Canadians feel is very impressive. We believe in a social contract.

Jonathan Babcock July 25, 2007 at 1:46 pm

Right on, John. Minimum wage increases are just a means for politicians to earn points with the misinformed and poorly educated.

No one but but maybe a few part-time, entry level fast-food workers and similar positions earn the minimum wage – and that’s typically only for the first month or two to make sure the employee is worth keeping around, and then they either get fired or get a bump in pay.

If you’re trying to support yourself let alone a family on a minimum-wage income, then I’m sorry, but that is your fault. Poor attitude or poor discipline are the only excuses for someone stuck at minimum wage for any length of time.

With the current U.S. unemployment rate, pretty much anyone here who wants to work full-time and is marginally skilled can find work, and no one gets paid minimum wage for a full-time job.

The net effect of a minimum wage hike like the one we’re seeing is probably next to nothing. The poor will still be poor and the companies that hire minimum-wage labor will just staff fewer employees. What you’ll basically see is a bunch of teenagers running around having a harder time finding a part-time job.

Basically, anything government touches, it screws up. Let the market decide the price of labor.

dan July 24, 2007 at 10:35 pm

Anyone who’s taken an economics class and knows what Deadweight Loss is should be able to economically derail the whole thing.

a video a day July 25, 2007 at 7:14 am

i don’t really know what you mean here

Kevin July 25, 2007 at 7:33 am

I agree with that. I worked at the swimming baths when I was 16 and only got £2.16 per hour. When you consider getting there cost me £2 and then I had tax to come off it wasn’t really worth my while.

The USA is the richest country in the world but it is also the country with the biggest gap between poorest and richest and I think the minimum wage is a small step towards rectifying that, at least a little.

june July 25, 2007 at 9:53 am

your argument is a bit skewed. the larger the bell curve the larger the gap between rich and poor. but a larger bell curve means more middle class which is the power of any economy.

in some impovrished nation the gap is really just as large but because their is no middle class the curve is smaller thus the “gap” you speak of is smaller.

the other problem i see with your argument is that you ignore the role “the tax” plays. taxes from the top down is what caused it to cost you 2 and only make 2.16. the taxes on petrol are so high that it increases transportation, and the taxes on businesses both small and large is so exorbitant that wages stagnate toward the lower end.

government getting out of the way of people, has worked in every country throughout history, every time it is tried.

running business is not the role of government. if governmenrs new so much about running business then they all wouldn’t be running defecits.

Marc July 25, 2007 at 12:53 pm

Agree with the deadweight loss statement. Market externalisites being the key point on deadweight loss in our current climate. At the root level it comes down to ethics of where you want wealth and power concentrated in your society. Amongst the few or the many. I’ll take the many and along with that a minimum wage akin to Scandinavian levels, which produce a flat society with high economic growth and relatively low crime and equal opportunity.

Eastwood July 24, 2007 at 10:44 pm

The thing is, John, without minimum wage laws, employers could simply pay some kids $2 an hour (and their actions wouldn’t be illegal).

Eastwood July 24, 2007 at 10:46 pm

Oh… right, and what about those who don’t have an education and properly-trained skills to “do something about it”? You sound quite Conservative, John :???:

BrittMalka July 24, 2007 at 11:54 pm

Hi Eastwood

They could take an education like the rest of us. We didn’t receive our education from heavens above :twisted:

Jez July 25, 2007 at 2:57 am

No you didn’t, you were given the opportunity and financial support to do it. You were privileged to receive that education. I worked my ass off to get a really good degree… but it was a privilege to have that opportunity in the first place.

Jim July 25, 2007 at 9:35 am

That’s a load of Horse s***. (at least in the us) As long as you’re at least of average intelligence, and breathing, you can go to college.

I have friends that are dirt poor (one parent on disability and one that farms and does side jobs, makes maybe 1-10k a year) and the state pays for practically all his schooling.

Not only that, but most satellite campuses have far lower standards for accepting students. For example I have another friend who is below average intelligence, his G.P.A. was in the low 2 range, and he got in (albeit on probation).

In the U.S. the opportunity is there for everyone. Why do you think the B.A. degree is devalued now? It’s because almost everyone has the opportunity to get a degree.

I understand the point John is trying to make. It takes some desire to better yourself. These two people had that desire even though life didn’t set them up to succeed easily. There are many more people that I know for a fact could easily go to school but don’t, because they will settle for the bare minimum.

Jez July 25, 2007 at 2:47 am

People who argue everything is in their own hands and that there is no need for society to protect its weaker members are invariably the ones who made it.

John does not understand that most people do not have the ability to achieve what he has, and that some people require a level of protection from being exploited.

To twist Johns words to an extreme, how about:

“Starving people in Africa are where they want to be right now. If they were not, they would do something about it”

Its about opportunity and ability, neither of which are distributed on an equal or fair basis…..

a video a day July 25, 2007 at 7:16 am

strong words and brutally true

Marc July 25, 2007 at 8:17 am

I tend to lean more towards what Jez is saying. In my mind, in Canada at least there is a path for anyone to succeed, but if someone fails to find that path, I don’t feel that they should be taken advantage of.

I’m not speaking from any economic standpoint, I’m not that well versed in economic theory. This is a gut reaction.

While unemployment may be comparatively high to the US, the tradeoff is to cut and slash a great deal of wages from those who can least afford a pay cut.

From an employers standpoint, it’s great. If there’s a downturn, you just don’t pay people well. From the standpoint of someone who needs to put food on the table, it’s not that simple. I understand supply/demand curves but the reality of the human experience is that the risk/reward equation is rarely as simple as the models suggest.

Freebies July 25, 2007 at 8:18 am

Amen. I can’t help but think that anybody who says MW laws should be abolished hasn’t actually worked one and tried living off a MW living.

People need to read Nickel and Dimed by Barbara Ehrenreich, where the author goes and gets nothing but MW jobs and tries to see what it’s like to live off them. In the end, you realize it’s virtually impossible.

To say that most MW jobs would result in higher pay via the supply and demand theory is simply false. We already live in a fluid market, where the employer knows that as soon as a MW worker quits, he can hire a replacement that day. The turnover rate for MW jobs is so mind numbingly high that an employer can simply laugh at anybody who demands a higher pay than MW because there are 20 people next in line that will take the lower pay. Remember, these are jobs nobody wants in the first place.

And it’s nice to think that the people who take MW jobs would appreciate being able to negotiate their pay, but the truth of the matter is that most MW workers have hardly any education

If the argument is being made that MW laws are hurting businesses in that it costs them too much money, then what do you think will happen if we abolish the laws? Businesses will immediately lower the pay of their MW workers and then what?

Freebies July 25, 2007 at 8:40 am

Also, there’s a flip side to MW. If a person isn’t making enough to live off of and it comes down to buying food for a week versus a bus pass so they can get to work, what do you think they are going to do? MW tries to help out employers as well.

And the argument that the losers in all this is the consumer who ends up paying more is a moot point to me. No offense, but if somebody feels they are losing out because they have to pay an extra dollar for a pair of jeans or a an extra nickel for their morning Starbucks, then stop buying the lattes and designer pants. I’ll gladly pay an extra quarter here and there so that the guy behind the counter can afford to live. We’re not talking about paying extra so that he can upgrade his Mazda to a Ferrari, we’re talking about paying extra so that he doesn’t have to tell his kids that they’re having ramen noodles for a 90th night in a row.

Honestly, living off MW isn’t as easy as people make it sound.

John Chow July 25, 2007 at 9:43 am

If the argument is being made that MW laws are hurting businesses in that it costs them too much money, then what do you think will happen if we abolish the laws?

They would hire more workers at home instead of subbing the jobs out to China.

Freebies July 25, 2007 at 9:50 am

I agree with you that they would hire more workers at home instead of subbing jobs out to China, but since we know they are paying the Chinese workers only a fraction of what MW workers here in Canada and the US make, we don’t end up with a very appealing system. I think almost everybody who has had their job outsourced would agree that they wish they had their old job back, but not if it meant they were getting the same wages that the Chinese people are currently getting.

If we establish that living off $5.25/hr is almost impossible and abolishing MW laws means we are able to hire more people for $2/hr, then what is the upside? Instead of having a larg group of people struggling to make ends meet while earning MW, we now would have an even larger group of people not even coming close to making ends meet while they earn far below the old MW.

John Chow July 25, 2007 at 2:31 pm

The average person making min wage is a teenage living at home with his parents. I never said you can live of a min wage. You can’t. However, most people making min wage don’t have to live off it.

Marc July 25, 2007 at 6:28 pm

That’s a fine argument in the US, given their social stance, but in Canada, the *average person* isn’t a good enough measure. That’s the fundamental issue.

I think that all of your arguments hold a lot of water in the US John, but the Canada I know leans much more towards on social agendas and safety nets than our neighbours.

Freebies July 26, 2007 at 11:44 pm

Ah, then that is where we begin to diverge on opinions, John. If you look at most low-income families in the US, the reason they are in the low econimical class is because they are trying to live off MW while they work as hotel maids or cashiers or waitresses. (Remember, there’s a huge difference between working as a waitress at an Olive Garden type (family restaurant where tips are decent) versus a truck stop diner (where you’re lucky to come in at $6/hr after you factor in tips).

Like I said, check out the book I mentioned upthread where the author tries to live off MW jobs for I think it was three or four months. The numbers are absolutely astounding as to how many people actually live off MW. There are far more people doing it than there are high school kids just making some extra spending cash for the weekend.

Mat July 27, 2007 at 9:16 pm

Economic fact is that as soon as minimum wage laws are abolished, historically, wages rise. For the poor too.

When the government determines the value of the worker it removes initiative to negotiate for themselves or collectivise. By removing the responsibility from the employee and shifting it to obscure law, the employee is less empowered and simply accepts the crappy wage.

When minimum wage laws are removed, the LACK of a safety net is what spurs people into action and forces them to create a new bargaining position.

In Australia until recently there were three systems – Government set minimum wages for certain industries, union-negotiated awards for others, and employee-negotiated.

In ALL instances the employee negotiated salaries are the highest and the government set salaries are the lowest.

june July 25, 2007 at 10:00 am

Its about opportunity and ability, neither of which are distributed on an equal or fair basis…..

no offense but that is a position of ignorance. you cant distribute ability that ultimately comes from God if you believe in one or simple genetics if you don’t.

Jez July 25, 2007 at 12:34 pm

Errm that was kind of my point to counter Johns argument that:

“everyone of us is where we want to be right now. Because if we’re not where we want to be, we would do something about it”

But as you point out we all have to work with what we’ve got, and for some people that simply isn’t enough….

Chris Sandberg July 25, 2007 at 8:10 pm

It is true that opportunity and ability are not distributed on an equal and fair basis but does that mean it is the governments responsibility to help the underprivileged? I do believe that as a society we have an obligation to care for those who are in need, but we should take action ourselves and not rely on government. A lot more could be done for the good of humanity if people would just take action themselves and not try to lobby the government to take action. Why use the government as a middleman? It takes responsibility off our shoulders. If the government is taking care of the poor we don’t have to worry about it, right? That is a selfish excuse. The government will do it less efficiently than individuals can. Go make change yourself. If you think minimum wage is too low, go start a business and hire employees at what you think is a fair wage.

Pierce July 25, 2007 at 4:49 am

Well… You could look at Ireland which has had minimum wage for a long time now. In fact its at almost $12 an hour now.

So what does this mean? Well 80% of irelands population is now millionaires due to property prices.

But that doesn’t mean much. Heres some figures for you to compare.

Cinmea Ticket : $9
500ml Coke : $1.65
Big Mac : $2.80
Porsche 911 GT2 : $500,000 (thats the old model not the new one)
Local phone call : 0.02c/min
Internet/Broadband : (lowest i can find) $34/month

Then you have a loop hole, for example lets say your new at this job and because you have no qualifications you go on a training wage. Which means you get $2.50 an hour for a couple of weeks/months till your “Trained”.

Now lets say your a hard worker, you bust your balls to make a good living in an “unskilled job”. America was attractive because people can do that, the harder they work the more they are rewarded.

With minimum wage, its a guaranteed price lock. Employers will never give you a raise because the moral part of keeping them at minimum is covered by the legality of minimum which is increased yearly. That means people end up being lazy and don’t work because there is no reward for those who work hardest and no punishment for those who don’t work. Its the same result for everybody. This lowers the amount of entrapenures, success stories and quality of life for all.

Minimum wage is a terrible idea. It will lower the quality of life for the middle classes have and ultimately still make the richer richer. While keeping the poorest people poor, depressed and even more unmotivated that they were before. Further research will show that doing that too the poorest people who are the majority vote, are even less likely to vote. Which has other implications that I don’t have to mention.

It will do nothing for the poorest people. Snobbery will exist “oh your on minimum wage”, quality of life wont increase due to inflation on living expenses (Because the suppliers know that they can command a higher price) and employers know wherever you go you will get paid the same basement price.

Basically what I wanted to say, is that minimum wage will cause inflation so drastic over the next couple of years that you will wish you didn’t have a minimum wage. And when you eventually make it to middle class it really wont be that great, because of this inflation.

So what should you do instead of minimum wage, those evil bosses that pay $2.00 an hour? Move job to another company that pays more. Yes its a high risk, but without risk there is no gain.

I hate minimum wage, I want it to be gone with, but no we are trapped and we cannot get rid of it. House/rent prices are ridiculous, cost of living is over the top and we have minimum wage to blame.

Pierce

Marc July 25, 2007 at 6:35 pm

That’s some great information Pierce, thanks for sharing. It’s always nice to hear different perspectives. Personally I have a gut feeling that feels that minimum wages are necessary but reading a comment like yours help me to see the reality of the theories John’s talking about.

Pierce July 26, 2007 at 6:31 pm

I agree that minimum wage makes sense. The argument “to protect workers from exploitation” is so attractive, thats why we have it!

But people forgot to say “Minimum wage wont make you rich, it wont give you a better quality of life, it wont protect you from massivly inflated prices”.

Which is why I think a lot of people voted for a minimum wage. Which were false hopes and dreams.

We are now in the situation, where it is expoitation all over again. (Considering the cost of living, after all thats why people wont work for $2 an hour) and its not only legal its moral. People dont have any standing point in a union to get their wages increased because the union says, well the company didnt promise you anything and your being paid the minimum wage, what do you want us to do about it?

And speaking of unions, wasn’t that the original reason for unions? Such that if you were with a union with everybody else in the company you could force that company to give you a better wage? The force of terror and threat that a union could inflict on a company was the main factor they paid you well? And if a company won’t recognise a union just go to another one that does!

If you have minimum wage laws, do you need unions? (Well, short answer yes, because they might make you work 90 hour weeks which would be unfair but legal..n but the point is, wernt they the ones that could decide your pay?)

Pierce

Tony July 24, 2007 at 10:48 pm

If you read what John stated and I also believe to be true. Wages like what you suggest wouldn’t last long at all, increase of employment means a natural rise in wages. The harder it is for a company to find an employee the higher it has to pay them to keep them.

Freebies July 25, 2007 at 8:21 am

The problem is it’s not hard at all to find a MW worker. Even if unemployment is below 1%, if you offer a person a job at MW salary and their only alternative is no job with no salary, they’re going to take the MW job in a heartbeat. And then the minute they find a higher paying job, they’ll jump ship, starting the process all over again.

Dan July 24, 2007 at 10:49 pm

Ever been to a fast food place or retail store staffed by teens? Half the time those kids don’t deserve $2/hour.

The thing is, if some of these kids were to get paid what they’re actually worth, they might actually develop a work ethic.

Chris July 24, 2007 at 10:59 pm

:lol:

Now that’s irony. I’d say if they developed a work ethic, they might get paid what they are worth.

Not to be preachy, but I think one should earn everything in life including respect and compensation.

a video a day July 25, 2007 at 7:19 am

from my perspective, if the teens do the jobs that adults do, then they rightly deserve the same pay

Dan July 25, 2007 at 8:25 am

Absolutely. If adults are doing their jobs as poorly as many teens do, they don’t deserve to be getting $2/hour either!

Employers hire employees to perform a job. You don’t deserve a minimum wage of any amount just because you showed up.

june July 25, 2007 at 10:06 am

it shouldn’t be about just doing the same job. a rude lazy a-s bum could be running the register the same as a polite speedy worker yet they both get the same wage.

wages should ultimately be based on job performance not just holding the job.

wealth redistribution ultimately only helps those doing the redistrubuting, as they pull their cut out.

Marc July 25, 2007 at 12:31 pm

People don’t get paid what they are worth. They get paid what a JOB is worth. Learn the difference.

Tony July 24, 2007 at 10:45 pm

I am a firm believer in less governmental control. Being from Australia we have had minimum wage controls for years now and we have one of the lowest goods manufacturing centers in the world. While we export heaps of natural resources our manufactured product exports is a bare minimum compared to some third world countries. I believe this is because of our minimum wage act and maximum government control on all aspects of business.

Jez July 25, 2007 at 2:53 am

The reason you have no factories has more to do with exchange rates and the comparative cost of living in Australia. It is the same of all Western countries… most manufacturers are migrating their operations to Eastern Europe / Asia.

andolini July 24, 2007 at 10:46 pm

I remember reading a statement given by Singapore’s then Prime Minister Lee Kuan Yew. At that time, the labor sector was asking for higher wages. He told them, “You must find your own level of competitiveness”, otherwise, the market is going against you and you will end up hurting. I agreed with his statements then. It is very true until now.

bpo.asia July 24, 2007 at 10:50 pm

Minimum wage laws make a country’s industry very uncompetitive. When China aggressively used its cheap labor in export, the US was unable to compete. Now, the US garments subsector is just a semblance of what it was before.

Jez July 25, 2007 at 3:03 am

Is that due to a high minimum wage in the US then. I thought it had more to do with currency exchange rates and the fact that China is still a developing country.

Marc July 25, 2007 at 8:22 am

That may be true, but the hidden costs haven’t been found yet. Take the hidden costs of importing food from china. All these companies make short term decisions to hire cheap factories and it takes a long time before the cost curve shows its true nature.

june July 25, 2007 at 10:09 am

the problem does probably rest more on currency and trade policy than wages.

china has its currency locked to the dollar instead of being subject to world market forces. this artificially deflates the price of exported goods.

Goddess Carlie July 24, 2007 at 10:50 pm

Interesting post. I’m not sure if I agree with all that you have said – but then again, it’s not something I know a lot about and would want to read more into it.

As for “if you’re not earning enough, get another job” sort of statement, I can vouch that it’s not that easy! I have been in a shitty job for six months and I was doing everything in my power to get a new job. Hell, I would have been happier to work at mcdonalds as a temp job if I could. However, where I live jobs are very competitive and there were a number of factors stopping me from getting a new job. one of them is the fact I don’t have a car so I have to get a job close to me. etc etc. I recently got anew job (yay!) so you have to work at it, and I was lucky to have a partner who could somewhat support me, but there are others who are not in this position.

It’s harder to get up when you’re down.

That being said, I hear that minimum wage in the US is a joke and poor people are just getting abused. It’s something like $14 where I live (as a casual I get $18). Living on that amount is a joke.

Anyway, money makes the world go round. The rich will get richer and the poor will have a damn hard time trying to break even.

Freebies July 25, 2007 at 8:24 am

You hear correctly then. I had trouble supporting just myself on a MW job, so when I hear about people trying to raise a family on it, I have no idea how they do it.

june July 25, 2007 at 10:11 am

i know that some people will lose a job and have to take a lower paying possibly mw job, but….

no offense if you are only making MW you really have no business starting a family.

Mikael July 25, 2007 at 10:36 am

If you have that attitude I hope that you never start a family.

And if you have to live on MW some day I hope you remember what you wrote here.

Freebies July 26, 2007 at 11:47 pm

Yeah, I know what you’re trying to say June, but it’s not as cut and dry as that.

Susan July 24, 2007 at 10:55 pm

I was just watching the news tell this story as I was reading this post. I have mixed feelings about this. Cost of living for many has gone up and requiring both parents to work. Sometimes the less fortunate are working 2 or 3 jobs just to make ends meet and didn’t have opportunities as many of us fortunate ones. Maybe it’s my soft heart :smile:

AsiaPartTime July 24, 2007 at 10:59 pm

The minimum wages in Malaysia is RM500 = $150. Is it low enough? :lol:

Mybloggo July 25, 2007 at 12:44 am

It is Damm Low……….

Michael Fultz July 24, 2007 at 11:04 pm

I’ve heard both sides. One is that minimum wage laws are bad, the other is that they are good. There are places where the minimum wage is high, for example in NYC, and it is workable because that’s an area where a lot of people want to do business. Same goes for California. I see the logic behind the idea that minimum wage laws actually hurt people, but, so far, I really haven’t seen any evidence of that. If a country or province or state raises the minimum wage 50 cents, will that discourage employers from hiring more people? I think that if that makes a big difference in your business, you might want to take a look at your business model. If I owned a business, and any of my employees were in contact with my customers, I’d want to pay more than minimum wage, because lousy service is a turn-off, so minimum wage laws would not be a factor in my hiring decisions.

Michael Kwan July 24, 2007 at 11:08 pm

A pretty big part of me agrees with John. Higher minimum wages either increase unemployment or they artificially inflate the price of goods. You can’t raise the minimum wage to a level that it becomes perfectly sustainable to live on, because the market will correct itself, making it, well, not sustainable to live on anymore.

Alex Ion July 25, 2007 at 2:19 am

That’s very well said.

I agree that higher wages will artificially inflate prices and I guess you know that, too. If you were to know minimum wages are $20 an hour wouldn’t you charge apples for 5 bucks a piece?

It has two sides I agree. Therefore it should be measured the right way.

Jez July 25, 2007 at 3:11 am

I dont think that is the aim of minimum wage…

In the UK there is a growing disparity between the highest and lowest paid workers as bosses give themselves an ever bigger slice of the pie.

History has proven time and time again that this kind of disparity leads to social unrest… so governments intervene…. as they have done for centuries…

TeamTutorials July 25, 2007 at 6:20 am

Without a minimum wage we would be in the same situation. Every body at the bottom would make $2 an hour so everyone at the top could make $100+ an hour. It would be a crying shame for the buys at the top to take a 1% pay cut and give up $100,000 so some of the employees could make a decent wage.

Lewis Empire July 24, 2007 at 11:16 pm

The trouble with changes in the minimum wage is that all the people who have slaved away for a few years to earn an extra $0.50 or $1.00 usually don’t get an equivalent percentage increase. They either keep the $0.50 or lose it all together.

Minimum wage was originally designed for students and part-time workers. Unfortunately, society has more and more people relying on it for daily living.

web development blog July 24, 2007 at 11:17 pm

I used to work in a minimum wage job and it sucked. It sucked so bad, I worked harder and got a raise. then I quit that crap job, and got a job making twice what I was. Then I got a degree and got an entry level job that made a crap salary, so I found a job that paid more. Then I found a new company and leveraged my old salary to get a better one. With all the money I’ve made by moving up, I’ve started my own company and the possibilities are now endless (they always were). This is the land of opportunity and its so unfortunate that a LOT of people sit on their asses at the bottom and complain about how little they get paid.

TeamTutorials July 25, 2007 at 6:21 am

And a lot of people bust their asses and never get anywhere.

Dan July 25, 2007 at 8:32 am

That’s true. But it’s also true that there are a lot of people that work hard and never seem to get anywhere, and sit around at home complaining about it with their friends and family on the cell phone while they watch cable tv, drink beer and smoke a pack of cigarettes, wondering where all their money goes.

Freebies July 26, 2007 at 11:50 pm

Feel good stories are great, but the vast majority of people living off MW jobs have no idea what they’re worth or how to leverage their skills to get a raise or how to even negotiate for a raise. These people are the uneducated folks of society, but far too many of them think (wrongly) that there’s nothing they can do about their situation. A little education goes a long way.

Joshua July 24, 2007 at 11:22 pm

We give away more and more of our responsibility to the government, and lose an equal or better amount of freedom.

The more freedom you seek, the more responsibility you must take.

Freebies July 25, 2007 at 8:28 am

Having the government make sure we as a society pay our workers enough so that they can keep a roof over their head and food on their plates isn’t that bad when we’ve already shown that if left to us, we won’t do shit about it.

Marc July 25, 2007 at 1:03 pm

You haven’t been giving freedom and responsibility to the government. You’ve been giving it to corporations. What a misguided statement! One that I hear parroted all too often. Take account of your life and add it up. Government power is a joke compared to corporate power.

OneYearGoal.com - Make Money Online July 24, 2007 at 11:38 pm

I hate to say it but you’re right. Having the government decide your labor is worth $7.25/hr discourages people from working and studying hard to produce labor that is actually worth that much on the market.

One Man. One Year. $100,000 online. Beats minimum wage.
http://www.oneyeargoal.com

Jez July 25, 2007 at 3:15 am

Don’t make me laugh, what can you buy with $7.25?

There is no way minimum wage discourages people from studying… what can you earn with a good degree in your part of the world? I would guess it is several times more than $7.25…. plenty of incentive to study…. or start your own business….

TeamTutorials July 25, 2007 at 6:22 am

With out minimum wage laws a lot of people wouldn’t have been able to afford schooling.

Hoo July 25, 2007 at 12:34 am

Preach on brother.

norisa July 25, 2007 at 1:06 am

John, you are very generous to share your knowledge with others. I’m a 37 yr old mother of 3 kids, even though I dont have knowledge in IT, I manage to create my first blog.www.norisa07.blogspot. Then after gone through your free online booklet I try to find a time to learn more difficult part. Thanks for being generous and helpful. May God bless you. Keep up the good work, John. I’ll be visiting your site every day… :razz:

xiaogang July 25, 2007 at 1:30 am

In China, there are too many human resource, if there are not minimum wage, then lots of blue collar just got little money which only afford food and poor house rent.

The employer is chasing for profit, if there isn’t minimum wage, then he will take it as low as he can.

Thomas De Maesschalck July 25, 2007 at 1:39 am

Nice article John, I agree with you. Generally the less a government interferes with the economy the better.

Here’s a blog which has many more articles on this subject: http://blog.mises.org/blog/

trigatch4 July 25, 2007 at 2:19 am

This post really makes my stomach turn. Are you kidding me? Have you ever heard of the “downward spiral of globalization”? Part of the problem is there is NO minimum wage. Companies look for cheaper and cheaper labor and materials and sure, they start outsourcing to places like India, China and Mexico.

Then these countries provide sub par working conditions and force long working hours while paying as little as humanly possible, ensuring their workers will live in virtual poverty. Oh… and if you try and start a union… YOU’RE FIRED. Nobody even dreams of starting a union because the 2 dollars a day they make is already so little and they have to feed their family.

In America, unions often negotiate their own “minimum wage” that must be followed or else they’ll strike but without unions in most industries you’d simply be looking at a DOWNWARD SPIRAL in economics. Companies like McDonald’s and Wal-Mart would let the lower class bid themselves into oblivion, willing to work for less than the next guy to pay the bills. Parent’s would dangle their kids out there for a few dollars an hour, knowing they’ll beat out folks who have to take care of themselves and pay their own bills.

So YOU are telling ME that the UNITED STATES won’t be able to compete based on PRICE and companies will go elsewhere to look for cheap labor… right?

Well last time I checked the United States doesn’t get bossed around my immoral hypocrits looking to shovel their load of BS propoganda on the intellectually feeble such as yourself. So you want to go to a country who DOESN’T think that someone working hard to put food on the table, shelter over their head and clothes on their body… and their families… is worth $7.25/hour than two things need to happen.

1) If you are a business and you outsource your work overseas to take advantage of there NOT being a minimum wage than shame on you. I’ll put taxes and tariffs on you for not following the standards, ethics and values that EVERY American company should follow. And if you want to sell products in America than you need to meet the standards of an American company.

2)You need to retry this entire “challenge” you talk about without the house, the car or whatever else you’re talking about. Lets see how long it takes YOU to start selling drugs.

Oh yeah… great point… when you’re only making $5.75 an hour and you can’t provide for your family or your family can’t provide for you it makes selling drugs a lot more attractive. Nice, i can buy new shoes. Nice, I can buy an iPod. Nice, I can eat dinner tonight. But no… you want to allow these companies to act like the lending tree of low wage jobs… WHEN POOR PEOPLE COMPETE FOR JOBS BASED ON HOW LITTLE THEY WILL ACCEPT TO DO YOUR DIRTY WORK… NOBODY WINS.

Your ideology is detrimental to this country. This task obviously failed to put your feet in someone elses shoes. Minimum wage is only ONE way that we ensure the needs of the lower class are met – saying inflation and supply/demand and everything else will merely discount any changes to the minimum wage is flat out wrong.

And for people saying, “The way these people work at Fast Food restaurants… they don’t even deserve $2 because most of them are so bad… shame on you, too” If you were getting paid crap money to do crap work that barely paid for crap wouldn’t you have a somewhat bad attitude as well? Is there nothing to say for the fact that most of these people’s PARENTS were probably minimum wage earning people who couldn’t raise their kids the best they possibly could? Sure… there are people able to “rise up” from this type of struggle but not everyone is so resilient and I would ask you… if you were in that situation how resilient could you be?

Reading this post truly saddens me and I hope you’ll adopt a different viewpoint on this issue because this is ridiculous. I recently set up a forum to discuss politics and would welcome yourself and anyone else who would like to further debate/discuss this issue to visit with me there… the site is http://www.politicalfury.com

I could continue but I don’t want to… I’m too tired and upset to continue. I hope none of the ignorant individuals on this comment sheet are our future governors, mayors and congressman.

Dan July 25, 2007 at 12:41 pm

“If you were getting paid crap money to do crap work that barely paid for crap wouldn’t you have a somewhat bad attitude as well?”

If that is their attitude toward their job, no wonder they don’t go too far.

Look, one guy will complain that flipping burgers is demeaning to him, and whine that he doesn’t make enough money at it, and spend his time chatting up his friends while the burgers get half-cooked or burnt.

Another guy will attend to his job, make sure the burgers get cooked properly, and make sure that the job gets done right.

Who do you think deserves better pay? But, most likely they will be paid the same because of a government dictate of minimum wage.

Mind you, the guy getting the job done right won’t stay at minimum wage long. He’ll get promoted or find a better paying job or get a raise because the restaurant doesn’t want to lose him. But, the whiner is going to be stuck at minimum wage.

Do you think it’s okay for the first guy to not do his job properly because he’s unhappy with his paycheck? Do you think it’s okay that someone who works hard gets paid the same as someone else who does not? Because by setting a minimum wage, you’re saying that just showing up to work entitles you to a certain amount.

Without a minimum wage, the employer (and the market) makes that determination. Has the guy that undercooked the burgers earned $5.85 per hour? I think not.

With minimum wage, the employer can only keep him and pay him the minimum, or fire him, in which case he’ll be making $0/hour.

Without a minimum wage, the employer could reduce his pay to $1/hour until he learns (hopefully!) to do the job right.

However, the reason that a lot of people feel that they “were getting paid crap money to do crap work that barely paid for crap” is likely because of minimum wage. Look, if you work hard and you make $5.85 an hour, and the guy next to you is a real slacker that half-heartedly does his job and is getting paid the same as you, how does that make you feel? Is that an incentive to work harder, or to work less hard and still earn the same pay?

Don’t the people that work hard and do a great job deserve more money than those that just shuffle through their days complaining about their job? How many times does a whiner get offered a better job versus the number of times a real go-getter gets offered a better job?

Look, employers employ people to do a job. People talk about needing this or that amount of money to get by, but they omit the fact that the employer needs this or that amount of work to get done. People talk about employers exploiting them, but people who aren’t doing their job attentively, people that are slacking off on their responsibilities, people who play Solitaire instead of working, these are people who are exploiting employers!

People ought to get a fair compensation for their work, but they shouldn’t receive money just for showing up. It has to be a two-way street. People need to get paid fairly, and the employer needs to get what they are paying for!

You can bet that the guy complaining about his “crap work” and forgetting to give people the fries they ordered will be the first to complain when he doesn’t get the fries he ordered.

Freebies July 26, 2007 at 11:59 pm

You’re assuming the company won’t fire the sub-par employee because there isn’t a large labor pool to find a replacement, which is categorically wrong. Finding a MW worker is like trying to find a blade of grass in your front yard. It’s not that hard (granted, as long as you have a front yard :))

If the sub-par worker is performing below his duties while the good burger flipper is working well, the company can easily fire the crappy worker, MW laws or not. You seem to completely overlook the fact that companies are free to fire at will.

Nick July 25, 2007 at 2:52 am

John it sounds like you and I had a similar upbringing. Poor people today have a massive entitlement complex. The “less fortunate” people I see all feel they’re entitled to a cell phone, cable, the latest fashion, eating out 4 days a week, ect.

And of course they all feel they deserve to get paid more then they’re worth.

What this will create is a cycle that will lead to more jobs going off shore > Which will create more poverty in America > There will be massive tax increases for wealthy people to “redistribute” the wealth > Wealthy people will move offshore.

You can be like the other mindless media drones who get their news from Comedy Central and believe that wealthy people are all evil villains and should be taxed to death, but if just a small fraction of the top 5% of this countries earners pack up and leave the tax burden to the bottom 95% would be huge! If you look around it’s already starting.

Even small time online marketers in these new Socialist countries are seeking a safe haven in places like Chile, and Thailand. People are tired of busting their ass so the people who are content with they’re Government handout can lay around all day.

Another thing that gets lost in this argument is that it’s not about the super rich vs the poor. The talking heads in the Government love to play that angle, but if you’re just doing Okay you’re going to shoulder the load for the “less fortunate”. You make $40,000 a year and your spouse makes $35,000? That’s puts you in a pretty high tax bracket, I hope you don’t mind paying for some deadbeats cell phone bill.

And ultimately the loser in the minimum wage hike is going to be the consumer because they’re the ones who are going to have to eat the labor cost.

I’m off to http://www.escapeartist.com/.

PS. I wonder what these comments would be like if you weren’t banned from Digg :mrgreen:

John Chow July 25, 2007 at 10:01 am

I’m sure it’ll be like my trade hours for dollars post. :twisted:

Fred July 25, 2007 at 3:19 am

When politicians pound the table about the need for higher minimum wages, why don’t they also do something about illegal immigration. There is no issue depressing wages more than illegal immigration. Instead, politicians state that Americans won’t do “certain jobs” for minimum wage. So it is ok to hire illegals to work at jobs below minimum wage, but keep certain Americans unemployed? That makes no sense.

Additionally, illegal immigration does not just affect low wage earners. It depresses the wages of everyone in the workforce. If businesses had to pay Americans more money do lower skilled jobs, they would have to increase the wages of higher skilled workers too.

I believe that since politicians refuse to solve this issue, they really don’t care about poor Americans. They talk a good game, but talk is only talk.

GA July 25, 2007 at 3:23 am

In the UK, the minimum wage really badly effected old people… because companies stopped employing them!

I had one old man tell me that he was happy working in a wood shop earning a small amount of pocket money a week, but when the minimum wage came in he wasn’t able to work fast enough to command his wage and lost his job!

Then Gordon Brown stole their pension too!

Scam July 25, 2007 at 3:28 am

Talking from experience I know that where I work in the UK we just slashed recruitment when minimum wage came in (equivalent to $11/hour I believe).

Since minimum wage came into force the number of employess where I am has dropped from 160 full-time equivalent to 74.

That is because we operate on such tight margins that paying minimum wage to the original number of employees would have caused the business to become a loss maker.

Increasing prices in such a competitive market was, and still isn’t, an option and so the Act has, in my opinion, caused more unemployment.

Minimum wage also means that those still in employment in many sectors now have to work a whole lot harder to cover for the hours that have been lost too.

Dave Starr --- ROI Guy July 25, 2007 at 4:09 am

Wow, am I surprised to be coming down so strongly on John’s side of this debate. And am I shocked at the number of socialistic folks who seem to have not the slightest clue as to what the role of democratic government is and how simple economics works.

I am an American man who worked for many years at regular jobs … well above minimum wage … until I saw the light and went in business for myself.

(Steve Pavlina has a couple interesting essays on why you should never have a job, and I think he makes even more money than John, who also knows what he’s talking about and has done well for himself without relying on some politician giving him a mandated handout)

Minimum wage laws have NO PLACE in any democratic society. It is not the job of government to regulate pay to employees and, as several have shown proof here, minimum wage laws actually hurt lower skilled workers because they cause the pool of jobs to dry up … a bad, bad deal all around.

Stephanie Law July 25, 2007 at 4:33 am

Hi John,

Your dad sounds very inspiring.. has inspired me too now!

Kind Regards,
Stephanie

Paul B July 25, 2007 at 4:39 am

Minimum wage is a joke, there are many people with small business that can’t afford to pay themself a salary never mind have employees salary levels dictated to them by the Government. You pay what the market dictates, for most employers this means the value you bring to the company, how the hell can the government dictate that?

We’ve had minimum wage for years, and every year the large unions try and push it up even higher, I think it works out at around $14 (US) at todays rates. The result is there are no small businesses hiring staff, everybody either works solo, for the government or for large corporates. Comapnies only grow to the size that 1 person can manage. Luckily we have a large offshore finance sector but when that goes we’re screwed.

Dan July 25, 2007 at 8:40 am

You’re right, and, while you have politicians that blather on and on about how important minimum wage is or how pro-business they are and so on, government doesn’t fairly compensate employers for the paperwork they force upon them.

Take sales tax collection, for example. When I add up the amount of time it takes to complete all the paperwork and forms, and then take into consideration the paltry amount the state lets me keep as my “discount” for working on their behalf as a tax collector, I am getting paid far, far less than the minimum wage of the state, or even the Federal minimum wage.

It is naive to think that politicians care about anything other than getting and keeping themselves in power. They’ll support or oppose minimum wage laws based not on what is best for the economy, the people or the nation, but what gives them the best chance of getting re-elected.

Mike Zak July 25, 2007 at 4:43 am

Totally agree.

Min. wage laws are just some commie bullshit created by those who couldn’t offer much to the world they live in, but still want too much in return.

Graham Lutz, The Young Capitalist July 25, 2007 at 4:55 am

Why don’t we just mandate that everyone in the country makes at least $100k per year? If we artificially setting wages, we might as well make them live comfortably right? “oh no no, we can’t do that” say the leftists…but as long as it’s on a smaller scale, doing something absolutely ridiculous is okay because it makes us look good.

I think my Blog just became political. Thanks, John.

Mikael July 25, 2007 at 5:15 am

John writes:

You don’t like living on minimum wage? You can’t live on what you’re making right now? Then do something about it!

Well, its pretty hard to do something about it if you are sick och handicapped.

No, its better to do as we do in Sweden and let the union and the companies set the wages instead of having a government to decide it.

TomLeDree July 25, 2007 at 5:22 am

Here in the UK the minimum wage is £5.35 per hour for workers aged 22 years and older. (that’s about $11 US)

I guess we have things a lot better over here!

Tom July 25, 2007 at 5:39 am

There is another component to the minimum wage issue that often gets overlooked but is the driving force for politicians to raise it. Many union contracts have provisions in them that when the minimum wage gets increased so do their contracts.

This is where a driving force in the minimum wage battle in the United States resides. The democratic party is the party of the unions, and to pay them back for their donations, they have to raise the minimum wage every chance they get to reward their union benefactors.

bob cobb July 25, 2007 at 5:58 am

Very true. Most people don’t understand the issue though.

Steve Olson July 25, 2007 at 6:45 am

John,

Did you read Darren Rowse, Tim Ferris, and Brian Clark today?

Bravo!

I agree. Minimum wage laws make no sense. They simply make people feel good, and for a politician trying to get re-elected that all you really need to do. But if minimum wage was raised to a level that was meaningful it would cause untold damage to the economy. If people would just use their heads and think for themselves they’d get it.

If the government should set a minimum price you may charge for your time then why stop there? why not a maximum? Why just for your time and labor? Why not for your house or your car? Why not for ads on your website? Why not make minimum and maximum prices for everything? If the government regulators are smarter than the market they should be able to fix every inequity, right? Wrong! Dead wrong! I’ll say no more! If you don’t get it, Think! Think! Think!

Jeremy Steele July 25, 2007 at 6:55 am

It’s funny how a lot of people hate min. wage but LOVE universal health care, which is another example of government interference in the free market. John, what’s your stance on universal health care?

Starboykb July 25, 2007 at 7:07 am

I was lucky my country do not have any minimum wages. But many of these companies take advantages of it by paying you less, for example $400 (us$250) per month or even counted as pay by days like $16.00 (us$10). not to mention even paying you less working over time like $1.50 per hours. This causes raise of unemployments issue in the country because of the lower paid or not raising your salary. It just like you want this job, take it. If you are unhappy with your salary, just quit. :evil: I would still take because i want to pay my bill.

Bloggeries July 25, 2007 at 7:39 am

“It’s not the government’s job to take care of you or your family but many people seem to believe that.”

We’re the only mammal with heightened intelligence yet the only ones that allow slackers to do nothing. Any other species on this planet spends its days looking for food and shelter. WE do it by working.

Those that don’t work… It’s disgusting that those who do have to. When I see the gov “redoing and upgrading” the welfare homes I think… Why? Why make it comfy…

Also if you abolish min wage instead of welfare someone would hir ethe guy for 3$ to wash dishes. Have the gov write up the rest. (Company must be registered in the work program).

So instead of paying ~10$ for welfare, the employer pays 3, we pay a few. Its’ cheaper and everyone works. Also getting more $ for more kids that you wn’t take care of makes me sick.

Rant finished. I hope this doesn’t get deleted!

Sabrina's Money Matters July 25, 2007 at 8:27 am

A lot of states have instituted laws requiring certain things of welfare recipients, I am proud to say that I live in one of them, Texas, this is a pull yourself up by your bootstraps kind of state, you get welfare for a max of three years, then your behind has to find a J-O-B. Jobcore and the military are perfect options for those who have no skills beyond high school or have yet to complete it, Jobcore provides the teaching to get your GED and the military can give you a career.

What more could you ask for? I too am disgusted at the state of our nations welfare system. But voting makes a difference and I always make sure my congressmen, etc. know my stance on certain issues. Waste of time? Maybe..but I’m doing something while a lot are doing nothing.

Websites make money July 25, 2007 at 7:41 am

This test they put up may be useful for some statistical reasons, but you will never be able to live up to the challenge since you are used to your standards. The real challenge would have been to make you pay for everything, including car, home, gas, etc. Then would have been daring.
A…about high speed internet…well…does somebody on a minimum wage even has any?

Mosley July 25, 2007 at 8:00 am

John I agree with you… It makes me happy to know that you feel this way! Here is an article I posted on my Objectivism blog/podcast that sparked a pretty good debate.

http://talkobjectivism.com/minimum-wage-hypocrites/

If any of you would like to debate this on my podcast just send me an email!

Sabrina's Money Matters July 25, 2007 at 8:20 am

“I grew up in the poorest neighborhood in Canada. My parents came to Canada with nothing but my dad always told me that in this country, I have no limits on what I can achieve – that if I didn’t like my situation, I have the power to change it. I am where I am today because I was stupid enough to believe that.”

I believe that is what the US was founded on and I believe to the core of my being.

It is written that the pilgrims came here to escape persecution, thereby changing their situation for the better. I too grew up poor to a mother without a high school education and a father who try as he might, still can’t seem to get ahead.

But drive and determination are everything, I too believe the minimum wage is a joke and that supply and demand should rule.

Cody July 25, 2007 at 8:28 am

Best article you’ve written in a while. I totally agree that everyone is in control of their own situation. Whine and complain as they may, it’s still the truth.

kher Cheng Guan July 25, 2007 at 8:49 am

Recently there was an outcry from certain sectors calling for minimum wages in my country, MALAYSIA.Personally, I feel there should be a minimum wages scheme, to prevent blatant explotaition.

Reality TV News Blog July 25, 2007 at 9:13 am

I agree.

Mokkori July 25, 2007 at 9:16 am

You grew up in Canada, yet you somehow aren’t aware that there’s no national minimum wage? That’s pretty strange. Minimum wages are set by the province, not federally.

Growing up in the DTES, you must know that those people wandering the streets talking to themselves are not employable. And if they were in the United States, they would be in prison. Canada has higher unemployment because we have less incarceration. Period. Put all the inmates out in the street, and you’ll suddenly see Canada has a much better unemployment rate than the US.

As a matter of fact, as of this month Canada’s sitting at about 4.7%. The US was 4.8% for 2006. Are you by any chance using old facts?

Technobuzz.net July 25, 2007 at 9:21 am

strong words and brutally true

http://www.technobuzz.net

HMTKSteve July 25, 2007 at 10:13 am

Too many people confuse the minimum wage with a living wage. The two are not, and never were meant to be the same thing.

Minimum wage jobs (flipping burgers for example) are commonly entry-level jobs. These are the jobs a teenager from a middle class family take to enter the workforce and gain some skill as an employee. These jobs have never been meant to raise a family on.

Raising the minimum wage only hurts those at the minimum wage because of simple economics. If I have 5 workers that each earn $5 and hour and now I have to pay each of them $6 an hour will I keep all five or fire one so my labor cost stays the same?

Wage disparities are not caused by minimum wage jobs. If someone is a hard worker their boss will reward them with better pay and benefits because they want to keep them as an employee. Conversly, shabby employees will remain at a low level of pay because that is all they deserve.

Adam July 25, 2007 at 10:29 am

God Bless it! I agree totally with your article. It would appear that congress has never taken a basic economics course. It screws up supply and demand and everyone knows it. I think the minimum wage is used as a tool to please ignorant uneducated people.

InvestorBlogger July 25, 2007 at 10:52 am

Having done less than minimum wage jobs, and now being a business owner, I’m pretty much divided in my own mind.

I do know though, that when business costs rise, esp. wages (our business that is the largest segment of our cost structure – approx. 70% of costs) difficult decisions need to be made over hiring. Our business is so small, we can’t afford to be lossmaking or no-one would have a job, not even the boss.

So, when staff costs get out of kilter, most smbs have NO choice but to reduce costs. Could we raise prices? Yes, we could (we did), but it wasn’t enough to save jobs.

To save our business, we tried to redefine job duties, but our staff refused to accept the new assignment. That was a real pity for us… we DESPERATELY needed someone to do that assignment. That alone would have helped to increase sales…

Having worked in a MW wage job, I have to agree: it is NOT enough to do anything much. But then as a boss, I found some workers really just expect to clock in, do as little as possible, clock out, and get paid…

This is a very emotive argument… indeed.

Richard Osborn July 25, 2007 at 10:55 am

Maybe there should be a maxium wage law for exeutives. The maxium wage could be calculated based on the companies profermance and that way the rest of the money could be reinvested into the company and it’s employee’s.

chrisblogging.com July 25, 2007 at 10:58 am

There has been entirely too much talk about this in my state! It seems that it is really getting people upset…

russ July 25, 2007 at 11:02 am

“When wages gets too high, companies hire less. The means more unemployment. Canada’s minimum wage is $8.00 an hour (and our dollar is almost on par with the U.S. now). Canada has higher unemployment than the U.S. I wonder why?”

Ok, first off, Canada doesn’t have a minimum wage, its province by province. Here in BC I believe its $8, which is the highest in Canada, but I don’t know too many people who will work for $8, because there’s too much unskilled work available that pays more! I work in a restaurant as a dishwasher for $11. My boss can’t hire as many people as he needs because you can enter construction at $15 and be making $21 in a few months.
That said, I believe in minimum wage. Counter intuitively, minimum wage has very little effect on unemployment compared to other employment taxes and redtape, and mentally challenged, or just plain stupid, people do not deserve to be forced to eat McS–t because its all they can afford. Education is easy to get for most of us, but all of us deserve to live with dignity. I will not work for $8/hour, and wven 11 is low to me now, but there are other factors I won’t get into that make this satisfactory for me for now…
Supply and demand be damned, the US subsidizes its oil, agricultural, mineral and other industries as much or more than any other country. Free trade with the US is a joke.

Matt July 25, 2007 at 11:31 am

Great Post John!

I couldn’t agree more – minimum wage isn’t a good thing at all and overall hurts the economy (in my opinion). I guess all the advocates of minimum wage laws think people would be taken advantage of without them which although true happens anyways.

Terra Andersen July 25, 2007 at 12:12 pm

If someone expects to make a living flipping burgers, they’ve got another thing coming. Those type of jobs and most entry-level jobs like it were meant for those still in, or fresh out of high school. I’m not sorry if people came illegally to this country and found that mcdonalds was the only job they could get. Although minimum wage should be heightened a bit, people can’t ever expect to live off of min. wage. This is why we start businesses or go to school to become a professional in a trade.

lee July 25, 2007 at 12:27 pm

Great post, John! The problem is this. An employee’s time is a commodity, just like gasoline. Just as the market sets the value of a gallon of gas, it sets the value of an employee’s time, (adjusted for type of labor the employee does). Just because you set a minimum wage doesn’t mean the empolyee’s time is worth more. If the employee’s time is indeed worth more, then she will get paid what she’s worth. If, on the other hand, her time is worth less, since she can’t get paid less, that job will cease to exist. In our economy, it will go overseas. Thus creating unemployment.

thatedeguy July 25, 2007 at 12:33 pm

I couldn’t agree with you more John. The laws are propaganda for the politicians to get the support of the stupid people who actually believe they work. All they do is cause a higher rate of inflation and a higher rate of unemployment.

Shawn July 25, 2007 at 12:42 pm

You made some big factual errors in your post.
1) there is no Canadian minimum wage; labour regulations such as minimum wage are set by the provinces and range from $7 to $8.50. http://canadaonline.about.com/library/bl/blminwage.htm
2) the US does not calculate it’s unemployment figures the same way as Canada (or Europe). The american numbers are artificially low. The real level of unemployment is actually higher in the US. Straight across, Canada’s 6.8% rate appears higher then the US’s 4.8%. If we adjust the Canadian rate to the US definition of unemployment, the Canadian rate is around 5.5%.
http://findarticles.com/p/articles/mi_m1153/is_6_123/ai_65159958
3) Therefore, for all practical purposes both countries are at the “natural” level of unemployment and do not have significantly different rates of uneployment.
4) We are in a global economy. Country to country comparisons are not useful. it’s better to do a state or province level comparison. So using the US definition, Alberta with it’s minimum wage of $7 is at about 2.3% unemployment (3.4% using standard definition of unemployment). While BC is at 3.6% (4.8% using the standard definition) despite having a $8 minimum wage.

Really, the min wage doesn’t figure in any major way into the unemployment rate. Other factors such as commodity prices and government management of the economy are what matters.

JNcool July 25, 2007 at 1:17 pm

Even though some of you might have a point against MW, but as you can tell it has both negative and positive effect. The system can’t be classified as true or false. It really depends on how people use it to serve what they want. Some might profit from it some might think it’s unfair. That’s part of life isn’t it? :roll:

Jack July 25, 2007 at 2:34 pm

I remember starting my first job at Canadian Tire at Minimum Wage. If anything it provides a good learning curve for income and saving as you grow older.

ian July 25, 2007 at 3:26 pm

I agree 100% with minimum wages to protect workers, it doesnt necessarily lead to unemployment, especially when all businesses within a country are bound by the same minimum wage laws. And it is just a safety net, the market forces of supply and demand still work effectively in determining wages above the minimum.

F1 Wolf July 26, 2007 at 9:55 pm

Excellent … Minimum wage harms those it should be protecting… Whatever the minimum wage laws, there will always be people who are paid less, ilegally… I am convinced that even the people who make the minimu wage decisions know it makes no sense. But it makes them look good and gets them re-elected.

Debo Hobo July 27, 2007 at 12:25 am

Min. wage keeps the less fortunate from being exploited financially. I raised my child and I on min. wage for many years. It is doable. The problems begin when the old adage comes in to play—“the more you make the more you spend”—when I started making well above the min. wage and went salary that is when debt sets in because then you have to keep up with the Jones’ & the Chows’.

I think the min. wage laws are very worthwhile and should remain in place.

bweaver July 28, 2007 at 7:00 am

Bravo John! It’s refreshing to hear someone talk about the minimum wage and put some logic behind it. Politicians use minimum wage rhetoric to buy votes, and couldn’t care less about the people they claim to be helping. Like taxes, minimum wage increases have a negative effect on businesses and can only hurt employees and customers.

I’ve worked at and below the minimum wage, even as an adult, and though I was happy to have a job, I decided low wages were not for me and found better-paying jobs. So, success was my decision, not a government program.

Again, bravo. And thanks.