Im taking political economy this semester. Let's just say, the teaher, she is of far-left, borderline socialist, believer. When a person in class talked about minimum wages and said how that would lead to unemployment, she stated that the people who typically make this argument are big businesses/corporations who dont' want to diminish profits. She stated that if businesses have so much money, then they should be able to avoid paying a higher wage to people. She said that businesses, productive ones, should be able to pay them and that if a business has to fire people or restrict output because they can't afford a few more dollars in payment given to employees, then the business should then go out of business.
Anyone care to comment/?
She's wrong....
My Blog: http://www.anarchico.net/
Production is 'anarchistic' - Ludwig von Mises
..."she stated that the people who typically make this argument are big businesses/corporations who dont' want to diminish profits."
What a tool she is, then. That's totally fallacious reasoning. However, I do have some reservations on the minimum wage, though I wouldn't argue from these kinds of premises.
My father owns a chain of retail music shops. He said to me that he would love to hire more staff, for example some highschool or polytech music students. Unfortunately, these people are simply not worth $13NZ per hour* (the current New Zealand minimum wage). This means that my father has less staff than he would happily be able to use, and these students remain unemployed and therefore poor and without any applicable work experience. Nobody wins.
Here's a link to a blog discussing the recent increase in minimum wages in NZ: http://pc.blogspot.com/2011/02/great-news-for-unemployed.html
Also, laws that make it difficult to fire terrible staff also make it less attractive to hire new staff, for fear of hiring a litigious dud.
Note: the sort of work these people would be doing is pretty basic stuff like cleaning and operating a till. Not exactly rocket science.
Increased minimum wage generally = increased unemployment. Why hire someone for more than they're worth?
Minimum Wage was intended to hurt low skilled labor in favor of more skilled labor. The policy was aimed at black men in particular and if you look at the unemployment rates you will find that up to minimum wage there was a small gap in unemployment rates between white men and black men and after the policy the gap expanded. Of course your professor will not tell you that little tidbit. So there are several groups of people that are very happy for minimum wage:
1. Union workers, 2. Bum middle and upper class teenagers. 3. Racist employers.
In fact the most insidious effect of Minimum Wage is to make the cost of being racist zero. Minorities would be able to offer their services at a lower price to the racist but instead are unable to do so because of government force.
There are also groups not in favor of minimum wage:
1. Disadvantage or challenged. 2. Miniorities, especially male unskilled laborers. 3. Single mothers with available daycare.
Minimum Wage is immoral. The state using force intervenes in a simple labor contract and forces the employer to buy services from a more expensive provider than they would of or no one at all. This only hurts the unskilled or disadvantaged and has the horrible product of making the minimum wage protagonists feel good.
...if a business has to fire people or restrict output because they can't afford a few more dollars in payment given to employees, then the business should then go out of business.
Then let's set the minimum wage to $100/hr and watch all businesses go out of business thus bringing the ACTUAL wage down to $0/hr. Problem solved.
Z.
This will teach you all the things that are wrong with her argument:
Tell your teacher that big business can afford higher wages and then ask if she is against small business competing against them. Since big business can't employ those who became unemployed from small business due to the higher wage, ask if she is for a higher wage for some at the expense of others. Also, ask her what is to keep big business from passing the wage increase off to consumers which will also decrease profits by decreasing demand and possibly putting big business out of business.