From: jmorriso@ee.ubc.ca (John Paul Morrison)
Subject: Re: On minimum wages
Organization: University of BC, Electrical Engineering
Date: Thu, 28 Jan 1993 03:26:21 GMT

In article <C1IuzG.7xv@ecf.toronto.edu> pelton@ecf.toronto.edu (PELTON MATTHEW ALAN) writes:
>In article <1993Jan27.034716.12266@ee.ubc.ca> jmorriso@ee.ubc.ca (John Paul Morrison) writes:
>>
>>581 words                  The Freeman
>>page 1 of 3                Foundation for Economic Education
>>                           Irvington-on-Hudson, New York 10533
>>                           (914) 591-7230
>>
>>      The Minimum Wage: An Unfair Advantage for Employers
>>
>>                    by Donald J. Boudreaux
>>
>
>  Unfortunately, minimum-wage jobs aren't usually of this type.  We
>live in a post-Industrial-Revolution society.  The type of jobs you'll
>do for minimum wage are equivalent to flipping hamburgers at McDonald's
>or hunching over in a factory.  A skilled factory worker does not exist;

It doesn't matter the type of the job or the skills, whatever. "unskilled"
or "low skilled" is a relative term. It is relative to the skills that
everyone else has in the job market. Everybody in the job market just might 
be a doctor or computer scientist, but there will still be ones who are better,
and ones who are worse. Unless everyone is equally skilled, there will
be people who are "unskilled" if you compare them to people who
are better trained. Without losing any generality, the example is still
valid.

>no matter how much experience you have, or how brilliant you are, you'll
>work at the same rate as anybody else.  And then your only bargaining tool

If you are a brilliant person, yet you take a low paying factory job, that
is your problem; if he capitalized on his talents, he could earn more
(and put a few people out of work by doing their jobs better)

>is willingness to work for a low wage.  Nobody will get hired if they ask
>for a livable salary, and all employees will end up miserably underpaid. 
>If a miniumum wage is instituted, the same people will be considered for
>hiring, since skill is not a factor.  And the same people will do the same
>work, only this time for wages that they can live off of.

You just aren't getting it. "livable salary" isn't a judgement the market
makes; the individual can decide whether a job is worth the money it pays.
But upping the minimum wage, to say $10 per hour, and preventing anyone
from discounting that rate, will cause more unemployment. Why?
Because you will have people in the job market who are worth $10/hour,
and you will have less qualified people, who are only worth $5/hour.
Now the employer won't hire the less qualified employee, when he can pay
$10 per hour, and get someone who is WORTH $10 an hour. This makes
the unskilled worker earn $0
per hour, ie unemployment. Since the unskilled worker can't work
for $5 and hour, which is what he is worth, he can't meet the $10/hour
demands.  The well meant 'solution' to the working poor, actually made
things worse. Without some drastic training, or a brain overhaul, the
person isn't CAPABLE of producing work worth $10 per hour. Since the
law won't let him work for $5/hour, he can't compete with the people
worth $10/hour. That's what puts him on the dole.

>>     Consider another effect of the minimum wage.  Because
>>there are more people who want jobs at the minimum wage rate
>>than there are jobs to go around, employers have little
>>incentive to treat unskilled workers with respect or dignity.
>>If an employer is abusive toward an unskilled worker, the
>>employer need not be concerned if the worker quits.  After
>>all, there are plenty of unemployed unskilled workers who can
>>be hired to fill positions vacated by workers who quit.
>
>  This only makes sense if you accept the previous point.

you have to accept it. It's a demonstrated economic fact. IT's been 
researched to death. The free-market economists predicted the increase in 
unemployement, caused by upping minimum wages, and the socialist Keynesian
types, with their socialist engineering experiments proved it for us.
A "fair" minimum wage can't be set by comittee; only the market can determine
what a fair wage is; because no-one would work for an unfair wage if
they can find better work. The employer will only pay as much to the
employee, as the job is worth doing; if the minimum wage is arbitrarily
forced up; the employer may react by firing a few employees, and dumping
the work onto the remaining employees (and they should be able to do
it, after all they are being paid more). And with all the marginal jobs
suddenly made more expensive, there will be a glut a poorly skilled
workers all too willing to replace others.


>>
>>     Minimum-wage legislation creates an excess supply of
>>unskilled labor.  This gives the buyers of unskilled labor an
>>unfair bargaining advantage over the sellers of unskilled
>>labor.  It is thus pure fantasy to believe that the welfare of
>>unskilled workers can be improved by such legislation.
>>Unskilled workers shouldn't be restricted to a permanent
>>buyers' market.
>>
>>____________________________________________________________
>>Professor Boudreaux teaches economics at George Mason
>>University in Fairfax, Virginia.  A longer version of this
>>article will appear in The Freeman, published by The
>>Foundation for Economic Education, Irvington-on-Hudson, New
>>York.
>>-- 

-- 
__________________________________________________________________________
 John Paul Morrison                     |  
 University of British Columbia, Canada |  
 Electrical Engineering                 |   .sig file without a cause
 jmorriso@ee.ubc.ca              VE7JPM |  
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