Minimum Wage Legislation Essay
I am going to pose the question to you the students of Sir Sandford FlemingCollege, do you really want the minimum wage legislation left in affect? Ascollege students you are not benefiting or gaining anything from minimum wagelegislation. The minimum wage legislation requires all employees to be paid atleast some fixed given dollar amount per hour. This sounds good, but it isn’tall that it seems!Minimum wage is an example of government intervention. The government has put aminimum on the dollar amount that employers can pay their employees.
Unfortunately when we implement solutions like the minimum wage, it is too lateto actually fix the problem, so in most cases it has effects that we cannotforesee as it is a reaction instead of a prevention method. Minimum wageactually helps very few people. The only ones that benefit from minimum wage arethose unskilled workers who are currently employed. Minimum wage restrictsemployment opportunities for the young, unexperienced, and those people witheducational disadvantages. They will continue to find themselves handicapped inthe job market as long as the minimum wage legislation remains in affect. Insociety 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 effectof a surplus drives down an individuals reservation wage, as they are willing todo and take anything for work. Minimum wage only makes this fact more severe, asit increases the supply of workers.
Minimum wage increases the cost of doing business, and unfortunately in today’seconomic conditions employers are not able to pass on the extra costs to theconsumer. Minimum wage is not helping workers, it is hurting businesses, and tomaintain any profit, and follow legislation companies have to cut labour costssomehow. Companies are being forced to take other alternatives because of higherlabour costs for unskilled workers. Businesses are forced to:1. Cut back current employees hours2. Not hire any more employees3. Let employees goAs you can see the reactions to minimum wage actually decrease opportunities forthe “unskilled” workers, instead of providing them. With any change in the inthe minimum wage the demand will decrease/increase dramatically, and exactly theopposite for skilled workers. When the minimum wage changes the demand forskilled workers remains the same regardless, but if there is a change it is veryminute. Overall the amount of job opportunities are decreasing, because of thecosts of labour is increasing for the unskilled worker, and it will be theunskilled workers who are the first to go in these situations because they donot have the specialized skills that make them irreplaceable.
Wages are used to compensate workers for their time, skill, and money that theyhave invested into themselves. The trend is for higher education, which inreturn receives higher wages. The reservation wage of skilled workers is higherthen unskilled because they would like to receive some return on theirinvestment, their education. As college students we should be able to relate tothis concept as we have put more time, effort and money in to ourselves thensome others, like high school students and we should be compensated for this byof course a better rate of pay. After one year of college you should receivemore 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 intoconsideration the opportunity costs you would have. The opportunity costs for acollege student is the wages you could have been earning instead of attendingschool as well as the time you could be travelling or starting a family, orwhatever 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, butunfortunately minimum wage is working against us. The opportunity costs for somepeople to attend college seems to high, so if we decreased minimum wage maybemore people would attend college. This would help out people individually aswell 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 workingconditions, 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 fixeddollar amount that is paid for many jobs that can not even be compared. Most ofthese jobs should have different pay rates, especially when the degree of skillis higher, but they don’t.
The government keeps increasing minimum wage, and making it tougher onbusinesses and at the same time discouraging unskilled workers from betteringthemselves, and for what. The economy is not booming, and even with increasingminimum wage rates the economy is not seeing any extra money being put back intocirculation. As well, the higher minimum wage rate keeps raising the level ofunemployment. I feel that if we put the burden on the people of Ontario to beand do the best they can that we would not need minimum wage. The skills that wecould produce would be widely demanded, so it would be to the benefit of manyother unskilled minimum wage earners to support the abolishment of minimum wagelegislation. You could receive better wages, and at the same time decrease theunemployment rate. Category: Business