“The true minimum wage is zero—the amount an unemployed person receives from his nonexistent employer,” Milton Friedman
A wage is paid when an employer (non-government) determines that he can profit by employing the person at that amount. If the wage is so high that the employer cannot profit, then he will not employ the person and no wage will be paid.
A job is created and continues only when there is a profit to be made from its existence.
When governments legislate a higher wage, employers must dismiss people who fall below the new value. I write as an employer who has had to perform that unpleasant task. Through no fault of their own, a person is suddenly without the means of supporting themselves and their family.
Employers can only afford to employ people if they can profit by doing so. How else can the wages be paid? Artificially high wages mean that either those employees who fall below that value lose their jobs or, if they are legislatively unable to be fired, the closure of the business.
The common perception is that it is the employer who pays the wages. The reality is that the wages come from the customer; the employer being merely the person who writes the cheque. If the customer won’t pay enough, then the employee has to go.
Minimum wage laws kill the jobs of the most vulnerable.
I found this to be an interesting article with a sound suggestion. Why not let local communities decide what happens within their own boundaries (and why restrict it to minimum wage rates)?
If there must be some sort of centralized control of the freedom to employ, or not, which is what a minimum wage is really about, then surely it should be done at the level of government closest to the people concerned.
It would mean that decisions have a recognizable face behind them – that specific people, neighbours, can be held to account if the decisions turn out to be poor.
It is not a new problem and a sensible solution was proposed in The Principle of Subsidiarity, first advanced in the 1891 encyclical Rerum Novarum by Pope Leo XIII. It essentially stated that social problems are best resolved by the smallest unit of society with the ability to resolve them.
That is still sound advice.