The idea that higher minimum wage helps the working poor is utterly ridiculous. It’s a lie spread by liberal politicians and their supporters so they can take more tax money from individuals.
According to the Calgary Herald, rising minimum wage was the cause of 25,700 jobs disappearing in the city. But things will likely get worse as Alberta’s minimum wage will soon grow to $15 an hour. The Bank of Canada warned that minimum wage hikes could cost the country up to 136,000 jobs by 2019. Ouch. That’s some hard cheese. 🙁
Minimum Wage is a violation of basic human rights
Instead of protecting our life, liberty, and the pursuit of happiness the government actually violates our rights by creating a minimum wage law, which prevents mutually beneficial, voluntary labour contracts between two parties from taking place. It’s absurd that some government official can think they have the right to prevent others from offering their personal services for pay.
You have to be an egotistical control freak to believe that you somehow know the magic amount of what a minimum wage should be. You also have to believe that this one arbitrary number can be fairly applied to millions of agreements and transactions between people living in different cities, with different costs of living. That kind of patronizing thinking is pure buffoonery to me.
What gives them the right to decide how much my service is worth? Apparently these politicians think it doesn’t matter if the work is shoveling snow, teaching calculus, or giving CPR, because everyone’s time and labour is magically of equal value! But anyone who reads this blog regularly is smart enough to realize this is simply not true in the real world.
When I worked at a warehouse earlier this year I was making about $14/hr. My coworkers and I were pleased with our pay. Nobody talked about unionizing because we were all treated fairly. But if minimum wage were to increase then some of us would lose our jobs for sure. Even if we want to come back the law would make it illegal for the company to hire us at $14/hr. It would be very difficult for laid off workers to find a similar job that pays better. Raising the minimum wage displaces workers and increases the incentive to leave the job market altogether to live on social assistance. This is very damaging to the lives of low income workers.
How Minimum Wage hurts the poor the most
There is a myth being spread that governments can somehow mandate employers to pay all their minimum wage workers more money. And therefore, an increase in the minimum wage will benefit those workers.
Unfortunately the reality is not that simple. The actual fact is that governments can only give employers the choice of either paying their workers more or employing fewer workers – both scenarios are bad news for low income earners.
- If the owner employs fewer workers, the least skilled employees are the first to get canned.
- If workers are paid more, the least productive employees will lose their jobs and be replaced by other people who are more qualified and can provide more value to customers in the marketplace.
If an employee only creates $12/hr of value then it wouldn’t be sustainable for a business to pay him $15/hr for his labour. Either that worker’s productivity/ skills/ efficiency have to improve, or he will be laid off. Companies can also invest in new technology to bypass human workers altogether.
Furthermore increasing the minimum wage across the board will create inflation and raise the price of goods and services. The people who are most disadvantaged by rising minimum wage are the working poor because their cost of living will increase disproportionately to everyone else. The dollar is devalued and the affordability gap widens between the rich and poor.
So if the idea is to help low income workers, then increasing the minimum wage is the antithesis of what we need to be doing. If you are making around minimum wage, then logically speaking you should be the most against raising it because you are most at risk of losing your job.
Why the Minimum Wage is Racist
Minimum wage laws discriminate against unskilled workers in favor of skilled workers, and a huge amount of discrimination takes place against minority groups, such as the black community.
https://panampost.com/editor/2016/03/28/history-minimum-wage-harmed-blacks/
Raising the Minimum Wage could worsen the income inequality problem. Here’s how.
Some will argue that raising the minimum wage will reduce the gap between low and high income earners. Except in reality that doesn’t necessarily happen. As minimum wage increases, labour participation rate decreases and low skilled workers can’t find jobs which grows the income gap between the rich and poor.
A report from the University of Washington found that when wages increased in Seattle, WA, some companies cut back hours of low wage workers. The study discovered that workers clocked on average 9% fewer hours, and earned $125 less income each month after the increase. Instead of growing the income for low wage earners, this is actually doing the opposite.
According to a publication by the Gettysburg College, $11.77 is the sweet spot minimum wage for minimizing income inequality among OECD countries such as Canada and the United States. In other words, most parts of this country would see income inequality decreased by lowering the minimum wage, not increasing it. 🙂
The irony of the Minimum Wage
Grocery stores and fast food restaurants are already quickly replacing cashiers with more automated checkout stations and kiosks. It’s sad and ironic how higher minimum wage will likely increase unemployment on low skilled workers when that’s the demographic that a higher wage is intended to help in the first place. Young people will find it even harder to find those entry level job opportunities. Only a first job can lead to a better job. 😉
Some politicians mistakenly believe they can force employers to pay someone a higher wage. But in practice, employers will either replace that person with someone else more qualified and is therefore justified to earn the higher wage, or simply get rid of that position altogether. Low productivity workers will be fired or have their hours reduced. And the remaining workers will be expected to take on additional responsibilities. Some of them will move into a higher tax bracket, earning relatively less for their time and labour, so they can fund welfare programs to subsidize the first group of workers who were laid off thanks to the higher minimum wage. Lol. 
The only people who benefit from higher minimum wages are the greedy, progressive political leaders who rake in the extra tax revenue and give themselves salary adjustments. But even that’s not sustainable as the the economy will eventually slow, and the cost of living rises for everyone.
Disclaimer: I do not have an economics degree. I just blog for fun. 🙂
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Random Useless Fact:
Bags of potato chips are filled with nitrogen gas to keep the chips fresh and prevent breaking during shipping.
I think standards are a good thing. Would it be fair for a company to pay $2 an hour, $3 an hour for your work? That’s what sweatshops pay in third-world countries and I’m awfully glad we don’t have those labour standards here in Canada.
I think your point about initially cutting back jobs is legit– but in the long term, don’t employees who are working minimum wage earn more and then spend more? Don’t those people spend more on healthier food or clothes or a trip to the movies? It’s not like people who are earning minimum wage are rolling in dough– they’re making small improvements to their quality of life. As a result, demand rises when there’s more people with more money. That demand in turn creates larger employment.
https://www.forbes.com/sites/johntharvey/2015/07/31/real-argument-for-raising-minimum-wage/#76f1d4c6777d
Sure, they earn more and spend more, while the cost of goods goes up. In the end the gov’t is just adjusting the value of goods and the dollar and we’re back where we started.
Sweatshops are terrible, and labour standards are important especially to protect young children’s rights. But at least in the developed world there are companies like swagbucks, Fiverr, and survey sites that pay people $2 to $5. I think if these rates weren’t fair then millions of people wouldn’t be using them volunteeringly to make money.
It’s true that some workers will benefit from higher minimum wages. But what about the low skilled workers who will be replaced by either machines or higher skilled workers? A person may only be worth $10/hr right now. So if the minimum wage is $15/hr then he will be unemployable, because no company will hire him when others can do the job better. This means he won’t have the opportunity to work and improve his skills and hands on experience either. I’m concerned about him and others who are the most financially vulnerable to higher minimum wage laws. I agree with your premise that demand rises when there’s more people with more money. 🙂 My worry is that a higher minimum wage will create more people with less money.
Workers were already being replaced by machines before these new minimum wage hikes. Many companies will always be working to reduce their labour costs, no matter the price of labour.
Thanks for tackling such a large and broad topic and I appreciate the view. You raise a number of great points but I would argue that while I agree that basically all of them are valid, you shouldn’t frame them in a way that is absolute (like a Sith would) and instead look at pros and cons, treating your points as cons. If there is one thing that is unhealthy about these discussions, it’s the onesidedness of a complex topic which is described in a way that gives the impression of “I’m right and anyone who disagrees is a moron”. Even as someone who accepts your points, I still think that there is overall positive value in having a minimum wage and the pros outweigh the cons (depending on how high you want it to be, as you point out). Based on how you describe it here, I doubt you would be able to explain my arguments in a way that I would agree with, and still disagree with them because of how black and white you paint it. You should write about rent control next! Its a similar issue and I think the side you would take sees less… Read more »
Good point. I’ll try to be less divisive in the future post about rent control. 🙂 I’m also glad Ontario voters decided to kick out the old party who promised a $15/hr minimum wage by early 2019. There should be a balance when it comes to public policies, but the Wynne government was doing a terrible job in my personal view. I live in B.C. and we have an NDP leader in charge right now, haha. I’m willing to give him a chance, but if my taxes go up too much then I’ll consider moving out to Toronto.
I work in agriculture where we pay mostly minimum wage for harvesting and crop work,
I am happy we have a minimum wage to force employers to play in the same level,
Also the USA will mostly have higher minimum wages in most states.
The only problem we have is Mexico, in Mexico people have to work for $10 to $15 a day, this is not even enough to have a decent diet, in short not a good situation, so I believe this is where the main problem lies.
That’s definitely a problem down there. $10 to $15 is so little. I would starve if I made that kind of income. 🙁 I’m thankful I live in Canada. But I suppose if all Mexicans made at least a Canadian minimum wage then it would cost more money for Canadians to take vacations there.
Sadly, once again your… lets put it charitably and say, unfamiliarity… with economics is showing. The issue of the effect of a minimum wage increase on an economy is one that is not as negative as you attempt to portray here
https://www.nationalobserver.com/2018/01/15/analysis/five-big-claims-against-boosting-minimum-wage-debunked
https://www.bankofcanada.ca/wp-content/uploads/2017/12/san2017-26.pdf
https://economics.td.com/ontario-minimum-wage-hike
https://www.washingtonpost.com/news/wonk/wp/2018/01/11/what-does-a-15-minimum-wage-do-to-the-economy-economists-are-starting-to-find-out/
with regards to the minimum wage and its impact on minorities and the poor, “Black and Hispanic poverty rates would be almost 20% lower had the minimum wage remained at its 1968 inflation-adjusted level”:
https://www.epi.org/publication/the-erosion-of-the-federal-minimum-wage-has-increased-poverty-especially-for-black-and-hispanic-families/
tl;dr it is disingenuous to argue from a clearly defined position against min wage increases since economists and most of the research is not as clear and if anything it shows a small net positive for most economies in the long run
If the effects of a minimum wage increase in North America isn’t as negative as my post suggests then where is the evidence to support the contrary? For every argument I found supporting raising the minimum wage I found 10 arguments against it, which leads me to believe it is not a good idea by a long shot. For example I Googled the phrase, “does higher minimum wage HELP the poor” and read through the first 10 results. Only 2 results supported the idea, and I found they had weak arguments. An additional 7 results claimed that it doesn’t help the poor, and 1 article remained neutral. And then when I Google, “does higher minimum wage HURT the poor,” I went through the first 2 pages, and 18 results supported the argument that it does indeed hurt the poor, 2 neutral stances, and 0 results that claim it doesn’t. One of those affirming results was on debate.org where the question posed was, “does higher minimum wage hurt the poor?” 80% of voters said yes, and only 20% said no. So I am not against increasing the minimum wage for lack of facts and reason. I just don’t want Alberta or… Read more »
How about the report that you cited stating $11.77 is ideal? It was written in the USA, so converted to CAD that’s $15.40/hour.
That’s a good point, although back when the report was done the conversion rate would have made it closer to CAD $14.50/hr. But we can assume your figure of $15.40/hr; it’s not a big difference. The conversion to CAD doesn’t help the argument for any U.S. cities like Seattle or San Francisco which are raising their minimum wages to USD $15/hr. As for Canadian cities, my question would be is it worth sacrificing the lowest skilled workers just so society overall can have less income inequality? From what I can see no one has argued that higher minimum wage helps the lowest earning members of the workforce. Even the same report we’re looking at found that “the labor market for unskilled workers in the United States to not be competitive enough for there to be disemployment effects of raising the minimum wage.” We want to reduce income inequality by lifting up the poor, 🙂 not by bringing down the rich. So if the goal is to help the poorest workers, then it seems a bit counter intuitive to me that politicians want to throw the working poor under the bus in order for more qualified workers to make more money.
I know here in Alberta we’ve been tipping less.
10-12% for most places now (Boston Pizza, Earl’s…etc)
For someone to pour drinks or run food, do they deserve to make +$70k / yr?
$15hr + $20-25hr in tips ( $75 average bill, 5 tables)
Eventually we will just stop going out as $30 for a burger and fries will be too much. Or $15 pints..
Plus the idiocy of having the automatic tip options on the POS for 16% , 19% or 22%. No thanks.
Are those leftist sources supposed to add credence to your argument lul
You say the politicians motivation is to gain more tax revenue, but you also say that raising minimum wage reduces jobs, thus reducing tax revenue. It’s not some liberal conspiracy like you make it sound, they are just doing what they said they’d do in their election campaign.
You say minimum wage is a violation of basic human rights, and by that stretch it seems you want to abolish it. When in reality no minimum wage would encourage the exploitation of low income workers including new immigrants and racial minorities.
You make a lot of valid points, it comes down to supply and demand and the lowest skilled workers are at risk, but they are mostly teenagers who should be focusing on a career or entrepreneurship instead.
And finally, the $11.77 you quoted is from a US study in 2015. Converted to CAD that’s…. $15.40!
If more politicians learned more about economics then maybe they’ll realize raising the minimum wage might increase tax revenue in the immediate future, but bring in less money over the long run. Unless we tie the consequences of politician’s decisions to their pensions there is no incentive for them to think long term unfortunately. I do believe minimum wage laws are violations of human rights. I don’t understand how no minimum wage would exploit low income workers. Everyone has free will to accept a job or not, unless we’re talking about slave labour which is obviously wrong. A lot of minimum wage workers are teenagers. I don’t know if they should be focusing on a career or entrepreneurship but it’s hard to progress in either of those indeavers without some basic work experience. A higher minimum wage would hurt the chances of teenagers looking for their first jobs. If the optimum minimum wage is around CAD $15/hr according to that US study then I think policy makers should try to aim for a lower number. We know that anything higher would not only increase income inequality again, but also hurt the poorest of workers, which is bad for everyone. If… Read more »
Minimum wage increase is just artificial inflation created by government for higher tax revenue, at the end of the day all products and services become more expensive so the min wage workers still pays the same amount proportionally to their pay cheque, the government however gets more taxes from each transaction because now everything costs more. At the same time most others who had wages higher then the min wage dont get pay increases so now everything around them has also becomes more expensive, nothing more then government thievery sold under the guise of some feel good BS.
I would like to see a smaller government in this country. 🙂
A white privileged rich male explaining how minimum wage is bad for the poor lol please! You think getting rid of minimum wage and adding more profit to large corporations will result them in decreasing their product’s cost, cause deflation? That’s a big joke because more than 90% of the increase cost saving will only go to capitalist’s pocket (trickle down economics doesn’t work look it up). If you need further example look into third world countries where there is hardly any law – rich only becomes richer and poor becomes poorer. Obviously I’m not saying this means we should increase the minimum wage to $50, but there should always be some kind of government intervention to keep everything in check – look out and fight for the people who can’t do it themselves. If the situation was how you want it to be – there would never be accessible entries or hiring female employees (due to pregnancy leaves) – because firms would think it’s not worth doing so much when the return on it is a lot less. Furthermore kisok replacing humans is bound to happen – you can’t blame improvement of technology on wage increase. Trying to cut… Read more »
I haven’t really noticed how the poor are becoming poorer. The lowest quintile of income earners in Canada today live far better and more convenient lives with smartphones, access to social services, and cheap internet, than the top 10% of society did 100 years ago. That’s mostly because of new innovations and efficiencies in a free market where there’s no maximum wage.
I’m also not sure I would agree that female employees would not exist if not for minimum wage laws. I think women can do a job just as well if not better than men in most cases. Did you know that women get paid more than men in lots of industries, such as porn? And let’s not generalize about pregnancy. Maiesiophilia is a widespread fetish and those brave female actors can get paid very well for their performances. 😉
Thanks for enjoying by blog posts. That’s good to hear.