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Winnipeg Free Press - PRINT EDITION

Not now

By: Staff Writer

30/12/2009 1:00 AM | Comments: 6

THE Manitoba government should hold off on plans to increase the minimum wage in 2010 until the economy im­proves and the rate of job growth increases.

Since the New Democrats assumed power in 1999, the minimum wage has risen to $9 an hour from $6, or 50 per cent over the period, a rate of growth that ensured Manitoba neither led nor trailed the field in terms of legislated wages.

Proponents of regular and generous increases in the minimum wage claim they are necessary to reduce poverty. Opponents say wage floors actually cause unemployment and reduce the total number of hours worked. There is no consensus among economists on these issues.

As a result, governments tend to make somewhat arbitrary decisions in determining the minimum wage based on consultations with labour and private-sector groups, neither of which is ever entirely happy with the outcome.

Premier Greg Selinger has sent a weak signal that he intends to control spending in the upcoming year, which is not enough given the economic conditions facing the province. With that in mind, it would be inappropriate to increase pressure on those sectors of the economy that depend on discretionary spending, notably restaurants and nightclubs, which, incidentally, also rely on minimum-wage workers. An extra 25 cents an hour adds up a lot faster for employers than employees.

The province should wait until times are better before stiffing companies with inflationary pressure on the costs of doing business.

Republished from the Winnipeg Free Press print edition December 30, 2009 A14

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6 Commentscomment icon

"but a poverty level wage stands at $12."

WOW! you guys are rich! i didn't know Canada had it so good.

The problem with the above statment (huey) is that you believe that the minimum wage will reduce poverty. Unfortunately in 99% of all economic studies done, it has been shown that the minimum wage increases unemployment and therefore increases poverty. Theoretically this is explained by supply, demand and price. See this article http://www.capmag.com/article.asp?ID=4472.

SPBartlette

Both the persons I admire most on economic issues, Murray Rothbard and Ludwig von Mises were historians as well as economists. That gives them a different perspective on what went on than the Marxian exploitation view you are likely familiar with.

On the minimum wage issue, put "minimum wage" into the search engine at Lew Rockwell's site and see what comes up.

Minimum Wage, Maximum Stupidity by Peter Schiff was the top result when I tried it.

It starts out....

"In a free market, demand is always a function of price: the higher the price, the lower the demand. What may surprise most politicians is that these rules apply equally to both prices and wages. When employers evaluate their labor and capital needs, cost is a primary factor. When the cost of hiring low-skilled workers moves higher, jobs are lost. Despite this, minimum wage hikes, like the one set to take effect later this month, are always seen as an act of governmental benevolence. Nothing could be further from the truth."

...on it goes to explain why......


Peter Schiff is president of Euro Pacific Capital and author of The Little Book of Bull Moves in Bear Markets and Crash Proof: How to Profit from the Coming Economic Collapse.




Hey Chris, you're not really that familiar with the industrial revolution or the labour movement, are you?

The argument against the minimum wage is that it is a job killer. Most business start-ups fail because they run out of money before they establish themselves. We also have a major book store going bankrupt today. You can bet that the cost of labor contributes to the bottom line. Those businesses no longer pay any wages, not to mention those that never get started because the cost of even getting into business is overwhelming.

In economic terms, the poor get hurt the worst and the worst of the poor, the "marginal" labor force, get hurts the worst.

In a "free" country, the government would not interfere in the arrangement labor has with business at all. Better to have a job with some wage, even $5 an hour than to have no job at all.

There would be little unemployment in Manitoba if there were no minimum wage. So unemployment is another result of having a minimum wage. None of that is to mention that once the minimum wage goes up Unions are in a position to ask for an increase to keep their wages at a certain percentage higher level than the minimum wage so costs go up all around.

That all leaves less money in the pockets of consumers so more businesses go broke with fewer patrons.

Best to let labor and business work out their own deals which lets everybody benefit from supply and demand wages rather than legislated tyranny.

People would be wiser to concern themselves with the erosion of the purchasing power of their dollar than a pay raise anyways.

When the minimum wage was brought in it was designed to be poverty level plus 20%, this would allow the person to earn a living wage. The minimum wage as it stands today is $9, but a poverty level wage stands at $12. Here in Winnipeg the city eliminated business tax within the downtown area and the Federal Government has slashed corporate tax. If minimum wages were reduced to to one calorie above starvation level would business still complain?

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