Today, I found myself listening to Dave Taylor on Newstalk 770 CHQR during his afternoon show (which has returned to the airwaves after the host’s time in politics and unfortunately has taken Charles Adler off of my local radio dial…).
He had a discussion about Alberta increasing the minimum wage from $9.05 to $9.95 per hour, effective 1 September 2013. The focus of his presentation of the issue was by having a guest talk about the need for a so-called “Living Wage”, and that for Alberta that should be no lower than $15/hr. Dave seemed very supportive of this idea, which doesn’t surprise me based on his obvious socialist credentials and history. I was frustrated when callers who pointed out that increasing wages will drive up prices and make employers reduce employment. Dave refused to give these people the time of day.
As I have covered before in my musings, minimum wages are a dangerous intrusion of government into the free market – largely because the problem they are trying to solve (poverty) is a moving target and their good intentions have disastrous consequences.
First, if employers are forced to pay higher wages, any employee who cannot provide AT LEAST that much value (and really needs to be more), then the employer would be losing money to hire that worker. So they won’t. Higher labour costs also drive moves to improve efficiency through automation. This will also have a negative impact on employment.
Also, if we enforce higher wages, employers who need to use such “low-value” labour (i.e. it cannot be automated cost effectively), will be forced to increases prices. This includes everything from food in supermarkets and restaurants, to rents necessary to cover maintenance and janitorial service cost increases. Therefore, if we were to increase the minimum wage from $10 to $15, prices would also rise and those workers who are at the bottom of the wage ladder will find themselves NO FURTHER AHEAD. Those people who make more than the minimum will also find their incomes do not go as far because of the inflationary effects of the minimum wage.
High minimum wages kill low-value jobs and make everyone poorer. The minimum wage should be rescinded completely.