Why Minimum Wage Laws Should Be killed

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.

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.

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.

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.

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.

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:

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...
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_1...
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.

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.

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.

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.

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.

"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.

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

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.

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.

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.

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.

strong words and brutally true

http://www.technobuzz.net

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?

I agree.

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.

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.

"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.

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!

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?

"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!

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.

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?

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!

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

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.

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!

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.

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.

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.

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.

Hi John,

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

Kind Regards,
Stephanie

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.

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.

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!

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.

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:

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.

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/

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.