Friday, September 6, 2013

Please don't raise the Minimum Wage


Most people can sympathize with someone working in a low paying, entry level service job. The hours seem longer since you're on your feet most of the time and typically, you have to interact with people for the majority of your hours. While some tend to think that such jobs should demand a higher wage, mainly by the government mandate of a higher minimum wage, that answer is it would likely make many of those jobs would disappear. Thus destroying the first jobs of many young and inexperienced workers.

However, the damage goes further than that:

A wage is a price an employer is willing to pay for labor. It's also the price a worker is willing to sell his labor. Instead of a mandated minimum, this amount needs to be set by the market to properly assess to the supply and demand of labor. If no one in an given area wants to perform a specific task for the wages offered, the employer will have to offer a higher wage. If the employer cannot find enough employees, that might be a sign that it might not be realistic for that type of business in that area. If there are many people willing to perform the job at the price offered, not only may the employer the potential pay, it's a sign that there is available labor for other completable jobs. As more employers move into the area, the bidding for labor will result in higher wages.

Of course, this all goes without saying that it's now how much you make, it's how much you can buy with what you earn. If anyone really wants to aid those whom work menial job that do not pay much, the best thing to advocate either a hard money policy that doesn't allow central banks to inflate the money supply which eventually makes it's way to certain assets (as shown in the above post), inflating them beyond the means which the market accurately prices them.

 A case study of American Samoa:

http://www.businessinsider.com/the-story-of-how-an-ill-conceived-minimum-wage-hike-destroyed-the-samoan-economy-2010-1


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