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Minimum Wage Legislation

Oct 08, 1999 950 Words
Minimum Wage Legislation

I am going to pose the question to you the students of Sir Sandford Fleming College, do you really want the minimum wage legislation left in affect? As college students you are not benefiting or gaining anything from minimum wage legislation. The minimum wage legislation requires all employees to be paid at least some fixed given dollar amount per hour. This sounds good, but it isn't all that it seems!

Minimum wage is an example of government intervention. The government has put a minimum on the dollar amount that employers can pay their employees. Unfortunately when we implement solutions like the minimum wage, it is too late to actually fix the problem, so in most cases it has effects that we cannot foresee as it is a reaction instead of a prevention method. Minimum wage actually helps very few people. The only ones that benefit from minimum wage are those unskilled workers who are currently employed. Minimum wage restricts employment opportunities for the young, unexperienced, and those people with educational disadvantages. They will continue to find themselves handicapped in the job market as long as the minimum wage legislation remains in affect. In society today the demand for "unskilled" workers is low and the supply is high, therefore there is a surplus of unskilled workers in the job market. The effect of a surplus drives down an individuals reservation wage, as they are willing to do and take anything for work. Minimum wage only makes this fact more severe, as it increases the supply of workers.

Minimum wage increases the cost of doing business, and unfortunately in today's economic conditions employers are not able to pass on the extra costs to the consumer. Minimum wage is not helping workers, it is hurting businesses, and to maintain any profit, and follow legislation companies have to cut labour costs somehow. Companies are being forced to take other alternatives because of higher labour costs for unskilled workers. Businesses are forced to:

1. Cut back current employees hours
2. Not hire any more employees
3. Let employees go

As you can see the reactions to minimum wage actually decrease opportunities for the "unskilled" workers, instead of providing them. With any change in the in the minimum wage the demand will decrease/increase dramatically, and exactly the opposite for skilled workers. When the minimum wage changes the demand for skilled workers remains the same regardless, but if there is a change it is very minute. Overall the amount of job opportunities are decreasing, because of the costs of labour is increasing for the unskilled worker, and it will be the unskilled workers who are the first to go in these situations because they do not have the specialized skills that make them irreplaceable.

Wages are used to compensate workers for their time, skill, and money that they have invested into themselves. The trend is for higher education, which in return receives higher wages. The reservation wage of skilled workers is higher then unskilled because they would like to receive some return on their investment, their education. As college students we should be able to relate to this concept as we have put more time, effort and money in to ourselves then some others, like high school students and we should be compensated for this by of course a better rate of pay. After one year of college you should receive more then minimum wage as you have bettered your skills and invested at least $3000 to do so. This is the only direct cost, you also have to take into consideration the opportunity costs you would have. The opportunity costs for a college student is the wages you could have been earning instead of attending school as well as the time you could be travelling or starting a family, or whatever you gave up to go to college, and you want to be compensated for them.

We would like to encourage more people into getting a better education, but unfortunately minimum wage is working against us. The opportunity costs for some people to attend college seems to high, so if we decreased minimum wage maybe more people would attend college. This would help out people individually as well as society, it would actually spread out the supply of labour a bit more, and turn decrease the level of unemployment and poverty.

Wages are compensation for your skills, effort, responsibility, and working conditions, and they should be rated and fluctuated by these categories. Unfortunately minimum wage disregards all of this. Regardless of your education, skills, effort, you can still receive minimum wage. Minimum wage is a fixed dollar amount that is paid for many jobs that can not even be compared. Most of these jobs should have different pay rates, especially when the degree of skill is higher, but they don't.

The government keeps increasing minimum wage, and making it tougher on businesses and at the same time discouraging unskilled workers from bettering themselves, and for what. The economy is not booming, and even with increasing minimum wage rates the economy is not seeing any extra money being put back into circulation. As well, the higher minimum wage rate keeps raising the level of unemployment. I feel that if we put the burden on the people of Ontario to be and do the best they can that we would not need minimum wage. The skills that we could produce would be widely demanded, so it would be to the benefit of many other unskilled minimum wage earners to support the abolishment of minimum wage legislation. You could receive better wages, and at the same time decrease the unemployment rate.

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