Prevalence & Justification
As of 2007, 21 of the OECD’s
30 member countries have statutory minimum wages.
There is no convincing
justification for government imposed uniform minimum wages. These justifications
are widely known and they are mostly sort of pseudo justifications.
Empirical Evidence & Economics
I believe, the score has long been settled. The preponderance of empirical evidence tells us that the disadvantages clearly outweigh the benefits. This is probably one of the few subjects were a majority of economists would agree on.
Minimum wages eliminate or prevent certain jobs; opportunities for unskilled employees are lost and so on.
One easily identifiable winner of minimum wages and in particular of any raise of minimum wages are labor unions as pay scales of their members in some of their contracts are tied to the level of the minimum wage. Thus, if the minimum wage is raised, such members of labor unions will see their pay automatically rise as well across the board.
Fact is there are not many employees who for a considerable period of their lives or for their entire lives depend on earning minimum wages.
Minimum Wages Are Fundamentally Flawed
Minimum wages should be
completely rejected, because:
1. They
are a government imposed form of price
control
2. They
are an infringement of property rights
(e.g. the owner of a business has to pay more than the owner would otherwise voluntary
pay)
3. They
are a partial expropriation of
business owners
4. Business
owners are singled out to pay for a government redistribution policy
5. They
represent an indirect tax on
business owners in the amount of the difference between what the employer was
willing to pay and the minimum wage (it does not matter that this amount is not
first paid to the treasury)
6. They
are an infringement of the freedom of
contract (e.g. they also prevent a willing employee from working for less)
For all these severe and fundamental flaws it is high time to get rid of minimum wages!
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