How high should the minimum wage be? $10? No, wait. How about $20 per hour. Even better, $35 per hour. Are you not able to see that increasing the minimum wage only increases unemployment?
There's a dirty little secret in the marketplace. An employee has to return a value to the employer that exceeds what the employee is paid in wages and benefits. Otherwise, the employer cannot keep him on the job. When you place an artificial floor on wages, you naturally have higher unemployment, since not all employees will be able to return the required value.
If there were no minimum wage, the market would find an equilibrium wage and it is very likely that unskilled workers and teens could find a job. They would not have to return as much value in order to justify their position. Then as they got experience, their value returned to the company will increase, which will justify an increase in wages, or a new position with a different company that is willing to recognize the higher value returned.
It's simple, really.
Originally Posted by CuteOldGuy
Not quite and this is debatable:
A minimum wage is the lowest hourly, daily or monthly remuneration that employers may legally pay to workers. Equivalently, it is the lowest wage at which workers may sell their labour. Although minimum wage laws are in effect in a great many jurisdictions, there are differences of opinion about the benefits and drawbacks of a minimum wage. Supporters of the minimum wage say that it increases the standard of living of workers, reduces poverty, and forces businesses to be more efficient. Opponents say that if it is high enough to be effective, it increases unemployment, particularly among workers with very low productivity due to inexperience or handicap, thereby harming lesser skilled workers to the benefit of better skilled workers.
Further more:
Quote: "Statutory minimum wages were first proposed as a way to control the proliferation of sweat shops in manufacturing industries. The sweat shops employed large numbers of women and young workers, paying them what were considered to be substandard wages. The sweatshop owners were thought to have unfair bargaining power over their workers, and a minimum wage was proposed as a means to make them pay "fairly". Over time, the focus changed to helping people, especially families, become more self sufficient. Today, minimum wage laws cover workers in most low-paid fields of employment. In truth minimum wage should be raised in accordance to rising costs such as food, gas ect. Increase minimum wage to reflect the rise in living expenses. Which is still at an all time low considering that it is not in line with increased living expenses."
There are some economists who say what you are saying that it is a hardship on companies therefore they hire less, and make cut backs. Thereby no one gets employed. So you have a zero minimum wage affect. And some say that workers willing to work for less than minimum wage cannot because of the minimum wage law. I understand all this, but do not agree. I think if we got rid of the minimum wage law we will revert right back to the sweat shops and abuses that employers participated in years ago.
So this is clearly debatable depending on which side of the fence you are on in this issue.
The minimum wage has a strong social appeal, rooted in concern about the ability of markets to provide income equity for the least able members of the work force. For some people, the obvious solution to this concern is to redefine the wage structure politically to achieve a socially preferable distribution of income. Thus, minimum wage laws have usually been judged against the criterion of reducing poverty."