Looney Left will cost jobs

[Imported from Whale Oil Beef Hooked on Blogger]

In the first move of the new Coalition (I know, it’s a Claytons Coalition), as the price of support from Winston First and the Greens, the minimum wage will rise by a massive 25% over three years.

The Employers and Manufacturers Association surveyed 860 businesses and the result is unsurprising to those on the right.

70 per cent of businesses believed the increase would affect them “badly” or “very badly”.

Some businesses said they would have to reduce employees’ hours of work, or the number of staff they would employ, if they faced this level of increase.

“Employers take a chance on some of the people they employ, and at $12 an hour they are going to think twice about giving people that chance.”

They go on to say what all right thinking people believe.

“It’s equally clear the 20 per cent of employers paying minimum rates are those most directly affected, and it’s long been our view that employers and employees should set wages, not governments.

This policy initiative will simply cost jobs. The net effect will be negative as some marginal jobs will simply cease to exist.

An article by Linda Gorman at the Library of Economics and Liberty explains clearly the effects of Minimum wage laws.

Minimum wage laws set legal minimums for the hourly wages paid to certain groups of workers. Invented in Australia and New Zealand with the admirable purpose of guaranteeing a minimum standard of living for unskilled workers, they have been widely acclaimed as both the bulwark protecting workers from exploitation by employers and as a major weapon in the war on poverty.

Unfortunately, neither laudable intentions nor widespread support can alter one simple fact: although minimum wage laws can set wages, they cannot guarantee jobs. In reality, minimum wage laws place additional obstacles in the path of the most unskilled workers who are struggling to reach the lowest rungs of the economic ladder.

She then outlines several instances of unintended consequences of such laws, but the most telling and one with similar parallels to last years forcing of sheltered workshops to pay minimum wages, resulting in the closing of most of the workshops.

One skirmish occurred in 1990 when the U.S. Department of Labor ordered the Salvation Army to pay the minimum wage to voluntary participants in its work therapy programs. The programs provide participants, many of them homeless alcoholics and drug addicts, a small weekly stipend and up to ninety days of food, shelter, and counseling in exchange for processing donated goods. The Salvation Army said that the expense of complying with the minimum wage order would force it to close the programs. Ignoring both the fact that the beneficiaries of the program could leave to take a higher-paying job at any time and the cash value of the food, shelter, and supervision, the Labor Department insisted that it was protecting workers’ rights by enforcing the minimum wage. By the peculiar logic of the minimum wage laws, workers have the right to remain unemployed but not the right to get a job by selling their labor for less than the minimum wage.

Her final summing up says it all really.

In view of what minimum wage laws actually do, their often uncritical acceptance as a major weapon in the war on poverty stands as one of the supreme ironies of modern politics. If a minimum wage set $.50 above the prevailing wage helps the working poor with no ill effects, why not eliminate poverty completely by simply legislating a minimum wage of $10.00? The problem, of course, is that pricing people out of a job does not reduce poverty. Neither does skewing compensation packages toward money wages and away from training, or encouraging employers to substitute skilled workers for unskilled workers, part-time jobs for full-time jobs, foreign labor for domestic labor, and machines for people. Minimum wage laws do all of these things and, in the process, almost surely do the disadvantaged more harm than good.

 


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