Tag: don’t raise the minimum wage

Want to Help the Poor? Abolish the Minimum Wage

By Indri Schaelicke | United States

When it comes to the minimum wage, few people truly understand the complexity of the mechanism. Many believe that raising it is a quick fix to poverty. However, minimum wage hikes only increase the cost of living, hurting the economy for both the rich and the poor.

In 2014, Seattle signed a law that would increase the minimum wage there each year. By 2021, the wage will reach $15 per hour. While many support this law, libertarians are scratching their heads. Wages are an input of production, meaning that when a business produces a good or provides a service, part of its success is due to the employees and their necessary wages. When the cost of an input of production increases, the final price of the good or service must also increase. If all wages in a city increase, then all prices of goods and services will increase. Things will be no more affordable than they were before the minimum wage hike.

Minimum wage increases also lead to significant job losses. As mentioned before, when wages increase, the final price of a good or service must also. In order to combat having to charge high prices for their products, businesses can fire employees and move to automated systems that make use of the latest technology and do not require much human input. McDonald’s Restaurants recently started using automated kiosks in some stores to cut down on the amount of staff. This investment insulates McDonald’s from the fluctuations of the labor market and from the effects of minimum wage increases.

Kiosks like these have appeared in McDonald’s across the US as the fast food chain seeks to insulate itself from labor market fluctuations and increases in the minimum wage. Image Source

The minimum wage hurts those whose skills are worth less than a mandated minimum. As they are not worth, say, $15 per hour, employers cannot hire them at all. Someone whose typing skills only earn them $5 per hour is unable to find work at all. But, if the minimum wage ends, he or she will be able to find an employer willing to hire them. While $5 per hour is nowhere near the wage required to live a comfortable life, it is a stepping stone to higher paying jobs in the future. The person given in the previous example can work at improving their typing skills until they find employers willing to pay incrementally more. In this way, people are able to climb the socio-economic hierarchy.

Beyond just the minimum wage’s harm to the economy, it is also immoral, because it limits what terms two consenting adults can voluntarily negotiate a contract for. The state should not have any say in how a person values their labor. These terms are between employer and employee.

Abolishing the minimum wage will open up job possibilities for those that need them most. It is one step closer to a world where the state does not control every aspect of life. Individual sovereignty begins with being able to decide one’s worth.


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Everybody Loses: The Effect of the $15 Minimum Wage

By Ricardo Tremblay | CANADA

On January 1st, 2018, the minimum wage in the province of Ontario, Canada, increased from $11.60 CAD to $14.00. On January 1st, 2019, the minimum wage will be further increased to $15. Out further west, the province of Alberta has also passed a law that will increase the minimum wage there to $15 in the month of October 2018.

After only a week of the change being put into effect in Ontario, prices across the whole province for various goods and services have increased significantly. This is due to the fact that businesses will not, and rightfully should not, simply let themselves lose money because they have to pay their workers 20%-30% more. The easiest and most effective way for businesses to make that money back is to increase the prices of their goods and services accordingly. In other words, the price for goods and services at many retailers goes up. This is bad for customers, as they have to pay more, and this is bad for the businesses, as they are not gaining anything out of the change themselves and have to increase their prices.

“But it benefits the poor workers!”, some may say. What these people fail to realize is that businesses have also been laying off many workers, and giving minimum wage employees shorter and less frequent shifts. These employees will end up seeing that this ‘benefit’ may end up costing them their job, or not doing much more than giving them fewer work hours. The employees aren’t exempt from the price increases either, so ironically they will end up paying more for products as well.

This creates a situation in which businesses, employees, and especially consumers end up unhappy and frustrated. Not many people, if any at all, actually end up benefiting from the minimum wage increase. In comparison, the recent tax cuts in The United States have resulted in bonuses and wage increases for employees all over the country, and this was all done without hurting consumers, and by instead helping corporations flourish.

All in all, this is just another of countless examples as to why government interference and a government-controlled economy lead only to harder times for everyone. Some Canadians may have suffered due to these changes, so¬†hopefully advocates for higher minimum wages in other provinces and nations will soon realize the effects of their desires, and instead advocate for a freer, more stable method to benefit the working class, that isn’t at the expense of everyone else.