On Raising the Minimum Wage

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by Mark Nenadov (Written ?)

The following was published as a letter to the editor in the Windsor Star under the title "Raising minimum wage carries built-in risks". I've modified the paragraphs division, but otherwise it is as it was printed.

The June 3 edition of The Windsor Star contained a short article about a group that is lobbying for a raise of the minimum wage. I doubt that raising the minimum wage will do anything to help poverty. At best, some low income workers will see a small wage increase while many will experience layoffs. There is also risk of more Canadian companies going offshore, resulting in more jobs leaving the country.

Some research indicates that increasing minimum wage causes inflation and unemployment. Particularly persuasive are some examples from the American economy. In the 1981 Report of the Minimum Wage Study Commission, the 46-percent increase of minimum wage in the U.S.A. between 1977 and 1981 destroyed 644,000 jobs among teenagers alone. Another study performed by Clemson University economists suggested that a small hike in the American minimum wage could cost 1.9 million jobs in the long term.

It is my opinion that employees and their employers should have the freedom to settle for any wages that they can both agree to. The minimum amount of money a person is willing to settle for is clearly a matter of personal choice and shouldn't be dictated by government bureaucracy. I believe the ultimate goal should be to repeal minimum wage laws. Due to the presumed popularity of the minimum wage law, I wouldn't expect the law to be repealed any time soon, however.

Is there evidence that raising the minimum wage will reduce poverty? Even if one does feel strongly about the need for a minimum wage increase, it is a good idea to review the pros and cons before advocating such a change.